Hello everyone! Was hoping someone could help me out. I’m hearing a lot about people transferring their AMC stock from TD Ameritrade to Fidelity. Rumor has it TDA is selling synthetic shares. 🤷♀️ Obviously, I’m holding my shares with TDA…. Advice please!
Aviator, that’s exactly what I was thinking but gossip has it that when the time comes you won’t be able to sell your shares because they’re synthetic. I’m new to this, holding since March, I don’t know if I’m being naive in this but I don’t see how it would be possible not being able to sell. Synthetic stock needs to be covered, no? If that was the case, who would invest in the stock market? You’re not only taking a risk (albeit informed and calculated) in the market but an even bigger risk with your brokerage.
I’m not planning on transferring anything from Ameritrade, am I being stupid?
The term “synthetic” has been used a lot and it’s been confusing a lot of people. All it really means is that people are purchasing more stock than what actually exists (the float), which shouldn’t be allowed.
For you and your broker, your shares just appears like a “credit” in your account that basically has the details of your purchase. Whether they were real (part of the float) or not won’t impact you. You can think of it as an IOU. All of the shares retail owns was done in good faith and are legit. The bad actors were the banks, market makers, and prime brokers, so they will be on the hook for making good on those sells.
The worry people sometimes have is regarding selling – having a buyer on the other end that will take your trade. This is going to be the case for everyone regardless of “synthetic” share or “real” share. The worry is whether or not your trade will get executed (maybe the whole order won’t get filled, maybe the price is too high for a buyer, etc).