Welcome back to the channel everyone, the fail to deliver data for the second half of june has just been released. So today i want to talk about that data and what it means and also how the amz stock was removed from the threshold securities list and whether the hedges can just keep doing this forever. Trust me guys you do not want to miss this video, so stay tuned and let's make some money, but guys before i dive into the video. I just want to give a massive shout out to the 1400 of you that have currently ding that notification bell, because you guys are always the first to watch a new video as soon as it's released so guys be sure to drop a like down below subscribe To the channel and ding that notification bell, if you haven't already so that you don't miss another video, just like this one and now i want to dive straight in with the key information.

So back in the first half of june, we saw fails deliver of 1.799 million shares. 1.259 million shares a very quick run up to 5.44 million shares as the amc price spiked and a very quick decline down to 1.4 million shares and even as low as 49 000 failed to deliver shares. But the data for the second half of june has just been released here. We've seen 2.3 million first deliver shares 4.053 million 3.63 3.71 3.88 4.4 million.

Just a very, very high level of failed, delivers all around this three to four million region. Obviously, this was also the time that the amc stock was on the nyse threshold securities list, because obviously it held this very high level above 2.5 million shares for at least five consecutive days, obviously running for at least most of the second half of the month. When the data for the first half of july is released, we'll see this trend continue on and potentially continue upwards until the 8th or the 9th of july, whenever the mc stock was removed from that threshold securities list guys. Clearly, there is a lot of failed delivers and therefore i do not think that the hedges covered all those felt delivered positions, because the amc stock did not run up too much.

I personally think that they kicked the can down the road. But what do i mean by kicking the can down the road? Well, there's a second transaction that hedges can perform to reset the clock, assuming that xyz is a hard to borrow security and that trader a or its broker dealer is unable or unwilling to borrow shares to make delivery on the short sale of actual shares. The short sale may result in a failed delivered position at trader a's clearing firm, rather than paying the borrowing fee on the shares to make delivery or unwinding the position by purchasing the shares in the market, trade. A might next enter into a trade that gives the appearance of satisfying the broker dealer's closeout requirements, but in reality allows trader a to maintain its short position without ever delivering on the short sale.

Most often this is done through the use of a buy right trade, but may also be done as a married put and may incorporate the use of short term flex options. These trades are commonly referred to as reset transactions. In short, they have the effect of resetting the time the broker dealer must purchase or borrow the stock to close out of fail. The transactions could be designed solely to give the appearance of delivering the shares when, in reality, the trade has no intention of meeting his delivery obligations.

The price in these transactions is determined, so the short seller pays a small price to the other market maker for the trade, so it costs him an additional fee. It therefore results in no economic benefit to the short seller for the reset transaction other than to give the appearance of meeting his delivery obligations and actually costs them additional money trader a may enter into a buy right transaction considering of selling deep in the money calls And buying shares of stock against the cool sale by doing so trader a appears to have purchased shares to meet the broker-dealer's close-out obligation for the fail to deliver that resulted from the reverse conversion. In practice, however, the circumstance suggests that trader a has no intention of delivering shares and is instead re-establishing or extending a failed position. Trader a and trader b agree on a price at which the buy right will be transacted.

The trade is consummated as a spread with the stock and option portion executed at the same time trader a sells, calls to trader b and trader a buys shares from trader b. The size of the trade is dictated by how many shares trader a is required to deliver to appear to have closed out. The settlement fail arising from a short position and avoiding a buy-in or large borrowing fee. On the same day of the buy right trader b.

Will, in almost every case, exercise the deep in the money options it bought from trader a in order to eliminate the short position created by seven shares to trader a in the buy right transaction so effectively, trader b, obviously sells those shares to trader a but then Receives the in the money calls and then exercises the calls to get the shares and therefore it cancels out trader b's position from trader a's side they've effectively got the shares to cover their failed delivers and also then sold more calls and shorted more stock effectively re-engaging. The filter delivers, but just resetting the transaction. The result may be a persistent fail to deliver position in the security at issue to the clearing firm. It may appear that trader a's purchase in the buy right has allowed the broker dealer to satisfy its closeout requirement trader a continues to execute a buy right, reset transaction whenever necessary and by the time of expiration of its original reversal.

It may have given up some of the profits in the form of premiums paid for the buy rights, but it has maintained its short position without paying the higher cost to borrow or purchase shares to make delivery on the short sale because effectively, when trader b exercises. Those call options, trader alien, has to give the stock that it bought from trader b back to trader b, because they're exercising the options, thus eliminating the long shares. So therefore trader a just buys the shares and then gives them back to trader b when they exercise the option. So trade a is still left with a short position, but it's reset the transaction clock.

This is obviously something that trader a can't do forever because it costs them money each and every time and they're still paying the interest cost on the shorts. They've currently got shorted to add to this trader a is still in its short position and still needs to cover the shares that it has shorted and therefore, while it might seem that this can go on forever. Technically it can't because they're still paying that interest cost and the additional cost each time to reset the transaction trader b, obviously takes on some risk because they have to buy the in the money, calls and then exercise them. Obviously, if the price falls, they could lose a lot of money on those call options and therefore trader a has to appropriately remunerate trader b or pay them off effectively to cover that cost of risk.

Guys. Let me know down in the comments below what you think of this failed to deliver data. Was it more fails than you're expecting and do you think the hedges have just kicked the can down the road or do you think they properly covered? All of these fails, if you want to pick up some shares in mc, but you haven't even yet signed up to a trading platform, be sure to check out the links down in the description below to weeble, if you're in the us and free trade, if you're In the uk to get some free shares with very low minimum deposits and as always guys if you enjoyed this video, be sure to check out some of my others. Alternatively, subscribe to the channel and ding that notification bell, because that way, you'll be alerted when i upload a new video cheers.