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https://www.marketwatch.com/story/how-w ... 2018-02-13

I knew it was rigged, but didn't understand how. Just another reason not to bet your retirement in the wall street casino

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Wall Street treats me a lot better than Blackhawk ever did!

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Interesting article and theory. I'm familiar with the VIX and the SP index options, they have been around awhile. It isn't really investing, it's basically very risky gambling. The bigger problem is these sophisticated market bets have been packaged into 2x and 4x leveraged ETFs and ETNs etc, available to the general public, and they have the look and feel of "mutual funds". But they are more like futures and options. They have all the warnings and disclosures but most people probably ignore or don't read the prospectus. Most people should stay far away. Just like bitcoin.

As for the point made in the article? I guess I could see that someone placing ridiculously low bids on ill-liquid SP500 index puts or calls would tend to drive the VIX index down, which is what has been happening the last few years.
Hmmmm. It would depend on the volume of actual trades in that market. If trades go thru those fake low bids are wiped out and replaced. The only way I can see that rigged scheme working is with a dull market with no real trades executed, just fake low-ball bids sitting there inactive with no takers?

I don’t really understand what they mean by posting fake quotes on the S&P without actually engaging in trading. How is that even a thing?

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"Let me give you one bottom line as a former government official. Government is going to kill this guy,"

Phil Mudd, Deputy Director FBI under Robert Mueller

I don't fully understand that either. All I know is buyers and sellers place (limit) orders at whatever price they want. The market makers can as well for their own accounts, to manage liquidity. The quote you see is simply the best price of all these different bids. Or you can look at the entire order book of all the buy/ sell orders at various prices and sizes of shares.

The fake part is not clear. My understanding is once you place an order you are committed if it goes thru. Maybe the players can back out on the execution??? Individuals can't do that.

btw these are index option contracts... puts and calls tied to the SP index. The index itself is based on real stock prices, those are not fake numbers.