[GUEST ACCESS MODE: Data is scrambled or limited to provide examples. Make requests using your API key to unlock full data. Check https://lunarcrush.ai/auth for authentication information.]  Ross Brown [@Hey_ross](/creator/twitter/Hey_ross) on x 5998 followers Created: 2025-07-19 18:47:40 UTC This type of swap—structured as two non-standard equity forwards, one on GameStop (GME) and one on Bed Bath & Beyond (BBBY)—raises immediate red flags, particularly given the economic status of the underlying stocks: •GameStop is a heavily shorted, highly volatile stock often used in meme stock trading and options-based gamma squeezes. •BBBY had its equity cancelled as part of its bankruptcy process, meaning its shares are worthless on paper and ineligible for any corporate recovery. Given those conditions, there is no ordinary economic rationale for creating a bilateral forward on both unless the transaction is being used for purposes other than directional speculation. Here’s a breakdown of likely motives and structures: X. Synthetic Collateral Creation / Balance Sheet Engineering This is the most plausible explanation. By entering into offsetting spread-bet cash-settled forwards on GME and BBBY, the participant may be artificially inflating or managing the appearance of assets and liabilities: •Long BBBY forward (worthless in reality) could be offset with a short GME forward (likely profitable if GME falls). •The gross notional of the contract (not the net exposure) can be reported on a balance sheet, creating the illusion of liquidity or exposure. •This can be useful in overnight liquidity, repo financing, or derivatives margining, especially when reported to a swap data repository or clearing partner. Because both contracts are cash-settled, there is no need to deliver shares—and if BBBY is already delisted and GME shares are hard to borrow, this circumvents the need for physical securities. X. Regulatory Arbitrage or Obfuscation In some jurisdictions, capital or liquidity reporting rules treat derivatives differently depending on how they are structured. A non-standard forward, especially if embedded in a “spread-bet” classification, might be treated differently under: •Basel III or IV liquidity coverage ratios (LCR) •Dodd-Frank reporting •Swap margin rules (CFTC/SEC exemptions) Creating a seemingly hedged position using a worthless security (BBBY) and a volatile one (GME) could be an attempt to mask exposure, shift economic risk off-books, or defer tax or capital recognition. X. Synthetic Short via Forward Exposure If the participant wanted to synthetically short GME without showing a borrow or short interest, they could: •Go short GME forward (cash-settled, no borrow required) •Pair it with a long BBBY forward, which costs them nothing because it’s worthless The appearance of a “paired” or “spread” trade may satisfy risk or compliance reviews internally, even if the long leg has no economic value. This may also be done to avoid triggering reporting thresholds associated with large directional swaps. X. Derivatives-Driven Manipulation or Layering In more nefarious scenarios, this kind of paired structure could be used to manipulate valuation benchmarks: •Some swap data repositories and regulatory bodies publish aggregated exposure data by CFI code or asset class. •Large notional positions in GME forwards may signal false interest or positioning. •If layered with options or other derivatives, it could be used to spoof sentiment or justify valuations on thinly traded books. This could benefit a hedge fund, bank, or market maker holding other positions (e.g., options, warrants, convertibles) that are sensitive to volatility or momentum in GME or BBBY. X. Hypothetical Scenario: When Both Legs Could Pay Out It’s rare—but hypothetically, both legs pay out if: •GME spikes and you are long the GME forward (or short and GME collapses) •BBBY is used as a synthetic loss leg for tax or balance sheet adjustment, and a side agreement with the counterparty assigns value anyway Alternatively, if both legs are marked to model (not to market), an entity could record a paper gain or loss without actual market validation. XXXXX engagements  **Related Topics** [gamma](/topic/gamma) [stocks](/topic/stocks) [gme](/topic/gme) [$gme](/topic/$gme) [stocks consumer cyclical](/topic/stocks-consumer-cyclical) [stocks bitcoin treasuries](/topic/stocks-bitcoin-treasuries) [Post Link](https://x.com/Hey_ross/status/1946643116548858162)
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Ross Brown @Hey_ross on x 5998 followers
Created: 2025-07-19 18:47:40 UTC
This type of swap—structured as two non-standard equity forwards, one on GameStop (GME) and one on Bed Bath & Beyond (BBBY)—raises immediate red flags, particularly given the economic status of the underlying stocks: •GameStop is a heavily shorted, highly volatile stock often used in meme stock trading and options-based gamma squeezes. •BBBY had its equity cancelled as part of its bankruptcy process, meaning its shares are worthless on paper and ineligible for any corporate recovery.
Given those conditions, there is no ordinary economic rationale for creating a bilateral forward on both unless the transaction is being used for purposes other than directional speculation. Here’s a breakdown of likely motives and structures:
X. Synthetic Collateral Creation / Balance Sheet Engineering
This is the most plausible explanation.
By entering into offsetting spread-bet cash-settled forwards on GME and BBBY, the participant may be artificially inflating or managing the appearance of assets and liabilities: •Long BBBY forward (worthless in reality) could be offset with a short GME forward (likely profitable if GME falls). •The gross notional of the contract (not the net exposure) can be reported on a balance sheet, creating the illusion of liquidity or exposure. •This can be useful in overnight liquidity, repo financing, or derivatives margining, especially when reported to a swap data repository or clearing partner.
Because both contracts are cash-settled, there is no need to deliver shares—and if BBBY is already delisted and GME shares are hard to borrow, this circumvents the need for physical securities.
X. Regulatory Arbitrage or Obfuscation
In some jurisdictions, capital or liquidity reporting rules treat derivatives differently depending on how they are structured. A non-standard forward, especially if embedded in a “spread-bet” classification, might be treated differently under: •Basel III or IV liquidity coverage ratios (LCR) •Dodd-Frank reporting •Swap margin rules (CFTC/SEC exemptions)
Creating a seemingly hedged position using a worthless security (BBBY) and a volatile one (GME) could be an attempt to mask exposure, shift economic risk off-books, or defer tax or capital recognition.
X. Synthetic Short via Forward Exposure
If the participant wanted to synthetically short GME without showing a borrow or short interest, they could: •Go short GME forward (cash-settled, no borrow required) •Pair it with a long BBBY forward, which costs them nothing because it’s worthless
The appearance of a “paired” or “spread” trade may satisfy risk or compliance reviews internally, even if the long leg has no economic value. This may also be done to avoid triggering reporting thresholds associated with large directional swaps.
X. Derivatives-Driven Manipulation or Layering
In more nefarious scenarios, this kind of paired structure could be used to manipulate valuation benchmarks: •Some swap data repositories and regulatory bodies publish aggregated exposure data by CFI code or asset class. •Large notional positions in GME forwards may signal false interest or positioning. •If layered with options or other derivatives, it could be used to spoof sentiment or justify valuations on thinly traded books.
This could benefit a hedge fund, bank, or market maker holding other positions (e.g., options, warrants, convertibles) that are sensitive to volatility or momentum in GME or BBBY.
X. Hypothetical Scenario: When Both Legs Could Pay Out
It’s rare—but hypothetically, both legs pay out if: •GME spikes and you are long the GME forward (or short and GME collapses) •BBBY is used as a synthetic loss leg for tax or balance sheet adjustment, and a side agreement with the counterparty assigns value anyway
Alternatively, if both legs are marked to model (not to market), an entity could record a paper gain or loss without actual market validation.
XXXXX engagements
Related Topics gamma stocks gme $gme stocks consumer cyclical stocks bitcoin treasuries