Jane Street took $15B hit in July tied to Situational Awareness

10 pointsposted 13 hours ago
by paulpauper
(reuters.com)

6 Comments

consumer451

12 hours ago

Finance is not in my wheelhouse, but if I understand this situation correctly, SA's positions went way up after the assets were purchased by Citadel, correct?

The theory being is that SA not only had 4x leverage, but telegraphed their position, and the real sharks smelled the chum in the water, and then got their fill?

lesuorac

11 hours ago

I feel like you're implying that the sharks tanked the stock price to then buy the assets at an artificially deflated price.

I think the truth is really that being 4x leverage in the long term is just bad decision making as the stock market is volatile and the "sharks" (Citadel) know this and know that you didn't hedge the volatility (you showed them your books previously) and decided just to wait for you to finish hanging yourself. The difference being a lack of active action by the shark.

consumer451

11 hours ago

Yes, I should pull back on that. I have read that getting multiple desks in one company to agree on one position is near impossible, so my previous comment's implication was likely beyond reality.

Just being 4x leveraged on risky bets is enough for even uncoordinated market factors to eat you, correct?

Is it fair to say that SA was in r/wsb territory, with a lot more of other people's money?

rvz

12 hours ago

That is almost double the FTX funds that was lost in November 2022. The figure was $8B.

Now Jane Street has a $15B loss, thanks to SA by an ex-FTX employee.

Here we go again.

lesuorac

11 hours ago

Sure, and the casinos in Nevada routinely pay out billions too. They (like Jane Street) just happen to have revenues in excess of their losses so they turn a profit.

> The secretive Wall Street trading firm, however, has generated trading revenue of more than $40 billion year to date, one of the sources said, easily outstripping trading revenue at the largest banks and other market-making rivals