we did see big fails to deliver early in the year in both amc and gme. reaching as much as 40% of a day's trading volume. since the beginning of the year, the average failure to deliver has been on average less than 2% 70 plus percent of the time it's less than 1% of the average daily trading volume in either of these two stocks. the important thing for people to remember is, you hear these things, it sounds like there might be a loophole. there's stiff regulatory penalties for not adhering to this what people should focus on is when you see elevated short interest, increasing borrowing costs, that combined with just ever rising prices, that creates a short squeeze. that's why we see this highly volatile price action in conjunction with all the momentum created by things like the wall street bets >> here is a big question, that is with so much trading in terms of total volume every day, off public exchanges, carter, do you think we have a good sense of what is going on in these off exchange platforms, wholesalers or in the dark well, there's no way to an

right now, amc and gme. my hypothesis is that there is really a finite amount of what people call dumb money. you see this coalescing around retail investors, maybe a few institutional stocks which are -- really the squeeze ended with clover, approximately where the stretcher ran out on the auction. you have people who talk about this. you have a lot of retail options , whales, big tech. a lot of these retail investors. joe: we just have one moment. obviously, social media seems to be a big part of it. do you see on sites like reddit and elsewhere, people jostling, or instant -- or influential voices who have a high propensity to select the stock of the day that everyone is going to go after? lily: to my knowledge, we did see for instance, jim cramer start pushing wendy's. a lot of these media personalities have gotten more savvy in basically understanding the retail effect. in the first round, you saw mark cuban, you saw all of these big names start pumping up the stocks and trying to encourage it to contin

and things like amc. amc was down at $1.97. gme while most pink sheets and these are not pink sheets companies officially, most low price stocks don't end up going 100 and 200,000% if you will, but the circumstance of this is not new. i think that's very important. it happens to be a new era with internet, reddits and tweets but this has been going on since time and memorial. >> right tony, your take. >> yeah. so i don't think the bait here is whether or not naked shorts exist. i think what mike is trying to show you the fact of the magnitude which if it does happen that we're seeing it. i will say this is not particularly my area of expertise, but the one thing i really want to help investors better understand is when you're thinking of shorting a stock, the reason that we're here to talk about options here is to protect your downside. when you're shorting a stock, whether you're doing it selling short or even if you're doing it naked, you have unlimited risk to the upside. so that's why we advocate for using strategies like a put

again, it happens in stocks all the time for generations and essentially things like amc, was down to $1.97. gmeat $2 so while most penny sheets -- these are not penny sheet companies officially -- notification low-priced stocks don't end up going 100 and 200,000% if you will but the circumstance of this is not new. i think that's very important. it happens to be a new era with internet and reddit and tweets but this has been going on since time in memorial. >> right tony your take >> yeah, so i don't think the bait is whether or not naked shorts exist, mike's trying to show you the fact that the magnitude of which if it does happen that we're seeing it. this is not my area of expertise but one thing i want investors understand is when you think about shorting the stock, the reason we're here to talk about options here is to protect your down side. when you're shorting a stock, whether selling short or even if you're doing it naked, you are unblim -- unlimited risk to the upside so we advocate for put spread if you're bearish like i am on okta or if you're mildly bearish on a stock protect yours

charlie: the gyrations in amc and gme , game stop has clearly caught the eye of sec commissioner garyeport, but sources are telling the fox business network that he is so concerned about the potential risk for small investors in buying these stocks, particularly through discount brokers and apps like robinhood, that he maybe imposing an sec rule known as regulation best interest on these apps, on robinhood on the discount broker s and what is regulation best interest do? it's basically a rule for broker s that says if you're a broker and you recommend the risky stock to your client, you have to tell them about that risk. you have to know your client. this be a sea change in regulation if this is to occur. these apps like robinhood, as you know, liz, are simply passive, right? you direct the trade. you, the individual. if between that trade, and it's being executed, you directing it and it's being executed, robin has has to step in on certain stocks and tell you about the risks involved in those stocks, that be a huge regulatory burden on all these discount brokerages and would put cos

they look at the small and big cap names that are getting the most mentions on wall street bet, amc and gme are by far number one and two, and followed by space and beyond meat zillow in there. plug power goodrich american airlines. remember that episode from a couple of months ago bed bath and cleveland cliffs. as for fundamental, david, i mean we keep getting reminded of interest expense at amc, about $700 million a year, that would put you above 2019 ebitda, but again, when we get these reminders from people who are likely on the short side, they say look, this is for a time when fundamentals do matter again, it's clearly not today. >> no, and we don't know when it will be and to that point, listen, gamestop obviously is still hanging in there, $282 a share. when this all began months ago, there were many who, or few i think who would have anticipated it would have helped up the way it has, it never did quite broke. it did fall dramatically from its highs and rebounded dramatically as well, as you take a look at that stock, not far, really off of those levels that we saw, well, that's, y

acknowledge that now they did everything but say that amc and gme should be down. you can imagine that if bullard put out someone -- >> on meme stocks. >> and said listen to meme stocks or adam aron comes out and says i have to do 500 million shares here because this is taking the game on. or ryan cohen comes on, the punitive ceo or not really of gamestop and open up a crypto bank and 4,000 different stores. he refrained from doing that because he didn't want to be right on top when he said it and would give me too much credit. >> you know, in terms of what to do in the market let's take theses nally bad days out of the picture -- theses nally bad days out of the picture and broaden it out global equity funds show biggest inflows in three weeks while b of a flows show the sixth consecutive week of tech redemptions. >> so there you go so you buy tech. >> what's up with that >> enough with the oils. a great run. enough with the cumminss we don't know what china is going to do. who knows what china is going to do what you focus on is what you last heard that was great.

maybe did short some shares of amc, you made some calls, tell us about what you did today and more importantly what you found out? >> okay, so i did not try to short amc or gme, but what i did want to do and what i did do is find out from a couple -- the goldman's, the jp morgans of the world, is there stock available borrow to be able to short the whole thing about shorting is that someone doesn't have a borrow and so i wanted to find out, is that really the case can you not get a borrow and i suspected that those kinds of firms would say, yeah, look, it is a really tight borrow and as a fortune, you have to pay a ton in interest to borrow it but it was not that at all. gme and amc easy the price to borrow 60 basis points a year, near nothing. the price for amc, 7% per year which given the volatility that this stock trades with is nothing, right it trades well more than that moved way more than that just today alone. so that tells me the reason that the borrow isn't expensive is because there is not that many people who want to borrow and short it you don't need to take the risk of being a naked shorter when you could easily just go barrow it from a brokera

stocks and the meme coins with dogecoin going down, or it's been down a bit over the last few weeks and amc, gmeth is interesting to see happening i should note i'm actually a doge investor myself. >> does that undermine the valuations for both of these different sets of assets if it's just a simple trade-off between the two? it raises the question that they'll both be propped up until there's a new fad. >> quite possibly. i think this is what's been really interesting to see over the past couple of weeks and months is how retail investors are approaching these meme stocks i think retail investors who are investing in these know, they know what trend setters have always known, that hype itself is a partial ingredient for success. is a sufficient, sustainable ingredient for success no but it's about finding arbitrage opportunities. and the hype around these does create a short-term dislocation that investors can capitalize on. >> so you said you were in doge, mercedes how else are you playing this? you've been coming on this show talking about the rise of retail trading for a while and looking at

a segment of investors who, i mean, it's like amc, gme that's their team and they love their team regardlessf what's actually going on, on the field. it seems to me like, in a market like this, tudor jones right along these lines, you've got to figure what's the fundamental thesis that you're investing in? if you're investing in gamestop, what do you think they're actually going to do to have a significant place in gaming going forward? is ecommerce going to get them there or as we'll hear from microsoft in a couple minutes. is cloud and streaming going to come in, in such a wave, they're a middleman that gets cut out? >> right and we've talked about this as well maybe you have to get creative with valuations. that's not something that old school, traditional investors really want to hear, but i think that's the new cohort of retail investors, thinking about this creatively, perhaps a gamestop or amc could use the capital raising on back of their surging stock prices to become something that they aren't right now hence that distinction magic beans, maybe, jon. lot oh tickets could be some ri

amc management you're probably praying and hoping the market stays afloat over the summer because you need time as your ally. >> while speaking to your investor, you said amc is doing a better job than gmey raising capital. do other companies and industries, could they use a similar formula? what, perhaps, could be right for this kind of strategy? >> we live in a world where spacs can raise money without an end game why is it in you're about established company you're not able to take advantage of the process? i think more and more companies, especially ones look at the price and say, my god. never expected to trade at this price. they're probably looking to what amc is doing and saying maybe we should do it, too. which will create consequences a real risk in the process where companies raise capital for things they haven't thought about yet, because we've had governance issues come out of this, and you saw it in the late '90s you have to worry about. i think you'll see other companies raise capital when they feel the price is right. and we need some governance mechanisms in place to make sure that that capital doesn't get wasted in bad investments, bad acquisitions, because management,

that can make 10 times, so when i play these crazy stocks i like risk-defined i think gme has a move like amc just had and you can get paid using options and risk is defined. liz: you know, the point is though, do retail investors who really don't know how to play this game, get trampoline belled in some cases and i'm talking about not the meme stock crowd but people who think oh, i can hitch a ride on the back of them and larry, you've got mudrick capital. this is not a stranger. this outfit is not a stranger in any way, shape, or form to amc stock. in fact, as i was reading this they had bought about $100 million in secured bonds in the past, so they understand this company. here, they buy 8.5 million shares, recently at 27.12 and suddenly, according to bloomberg , they have exited this entire stake. now, to me, that is worrisome because suddenly, you start to see a big spike in shares, we're at 31.95 right now. it's their way of making money, sure but there isn't a pump but is there a dump? is this why people need to be really cautious? >> well i think people always need to be cautious, because it's no

and it broke their empire. what we learn from history or maybe this time it is different. we'll explain. reddit names on fire. amc saw huge business over the weekend. gme, gamestop added to the russell 1000. still the financial media continues their take on what they call the dumb money connecting it to racism and sexism. you can't make this stuff up. i will discuss it with carol roth. that and so much more on "making money". ♪. charles: you know real interesting bifurcation in this market today. growth now really building up momentum. in fact it has been doing that the last couple of weeks, sparked in part by the sharp decline in the 10-year-year-old you just heard jackie talk about. lots of fan favorites like tesla coming back really nicely and they have been really foreshadowed by major action before this in the options market. joining me now "the wall street journal" gungin and gary kaltbaum and paul schatz. gun begin, tell us about the spike in options. you wrote about it. tesla last week saw a big spike in options action. >> we've seen, arc, tesla, these fan favorites come roaring back over the last week. arc and tesla are up 10% within five or s

necessarily gme and that is problematic for people, for traders if they're looking at a manipulation case. it is clear that it is gme and these other meme stocks. i hasten to say it is amcause they have not put out any disclosures. we've reached out to them. who knows what they're looking at but they are clearly looking at the genre here and again i should point out these are very difficult cases to make, manipulation. i'm sure they're looking at reddit message boards whether people are pumping the stock up beyond all means. we should point out gamestop itself, amc itself has been really careful in what they say. amc often comes out and says the shares are overvalued even as they're issuing new stock. you may not want to hold at these levels. gamestop said almost nothing. these companies themselves have been very careful but there is something going on in the market obviously that the sec sees suspicious in terms of the trading. they're clearly looking at it. one fallout could be the robinhood ipo. legal sources are telling me there could be legal issues with the ipo. robinhood is the app people trade on. they will have to do an ipo and do disclosures. we have a hard ou

amc up. >> well, that's -- >> and the ornl, the one true -- the g.o.a.t. is still -- gmerong. >> they reduced to two they're trying - >> with furlong going to the board this earning month interesting. >> that's interesting. >> i just think achlgt mc, adam aaron, once again, he has an opportunity to raise a little capital. >> he keeps getting that opportunity. >> he must be wishing he could sell his own stock >> bed bath was down two on friday wendy's -- >> i noticed clover came back after that one or two move wendy's has come back -- >> cliff's doesn't have much short position that was stupid. gaming, the insiders were all set and hit the bid. they fooled those guys. >> if you're lucky enough to have one be adapted by that crowd can, you're going to sell, if you can, unless you're the ceo, in which case you probably feel like you can't. >> it's become a giant joke. everybody -- the insiders -- everybody teeing up so if they are chosen -- >> they're ready to go >> yes. >> it brings us to reports of inside rating at ride. >> i saw that by phil and phil very quickly said, li

want to see pacman meme stock and the ghosts are shorts and -- >> jon, you think all the gme people are like what am i chopped liver? what is this amctill at 300 we're not even talking about gamestop >> week's not over, joe. week's not over. >> right all right. thanks, jon. >>> still a lot to come on "squawk box" this morning. more on amc plus some progress maybe being made on president biden's infrastructure plan in washington a compromise seems far off we'll talk about the best strategy for a bipartisan deal and whether one is possible. that's next. >>> as part of pride month cnbc is spotlighting contributors, our own anchors and producers. here's cnbc's ashley turner. >> never be afraid to be you yourself like fully embrace yourself. i took so long to come to the conclusion of who i am and it really kind of held me back trying to fit someone else's mold i obviously do not do that now like do not be afraid to embrace your identity. it is who you are. it's what makes you so special and nothing can take that from you. ♪ ♪ ♪ ♪ ♪ ♪ i'm dad's greatest sandcastle - and greatest memory! but even i'm not as memorable as eating turkey hill