The scandalous American brokerage company Robinhood met non-professional investors from the Reddit forum and raised the limit of possible operations with some assets, in particular the shares of the computer games retailer GameStop, writes CNBC.
Users of Robinhood, one of the world’s most popular stock trading services actively used by Reddit members, can now buy up to 100 GameStop shares at a time. Headphone maker Koss, smartphone maker BlackBerry, and computer peripheral maker Genius have all of the restrictions lifted.
Until now, only 20 GameStop shares could be purchased through Robinhood. At the same time, the limit of 100 shares concerns not only the size of one transaction, but the volume of the entire portfolio of one investor. Also, the limits on the purchase of shares of several other companies that have found themselves at the center of the scandal of recent weeks, in particular, AMC and Express, have been increased.
Reddit and its WallStreetBets subchannel found themselves at the center of a scandal in late December after members decided to punish large hedge funds that were shorting against GameStop, AMC and several other companies. Private traders began to buy up their shares, as well as call options on them, giving the right to buy securities at a predetermined price.
The massive purchase of settlement call options means that the investment banks and investment companies that issued them are forced to insure risks in the event of a possible fulfillment of the requirement by the holders. Such insurance consists in buying the underlying asset, in this case the stock, which increases the demand for them.
For several weeks, the quotes of companies that analysts previously considered unpromising, were growing rapidly. However, in early February, they began to decline again. Thus, GameStop shares fell in price during the trading session on February 2 by more than 40 percent.