May. 13 at 8:14 PM
$GRPN 🚨 Why GRPN’s options chain matters for shareholders 🚨
If you own GRPN, the next few days are going to be shaped by something most retail holders don’t watch: the options market. Here’s what’s happening in plain English.
When traders buy call options on a stock, the market-makers selling those calls don’t want directional risk — they want to make the spread. So they hedge by buying the underlying stock. The further out-of-the-money the call, the fewer shares they need to buy. But as the stock rises toward the strike price, they have to buy more shares to stay hedged. This forced buying is called gamma hedging.
Right now on GRPN, there are massive walls of call options at the
$20 strike — nearly 6,000 weekly contracts and another 4,700 June contracts. That’s roughly 1 million shares of notional exposure sitting just above current spot at
$18.50. Dealers are short most of those calls and short the gamma that comes with them. As GRPN climbs toward
$20, dealers have to mechanically buy stock to hedge — and that buying pushes the price higher, which forces more hedging, which pushes it higher again. It’s a feedback loop.
Above
$20, the options chain shows a secondary cluster of OI at
$25 with very thin positioning between
$20 and
$25. If
$20 breaks, there’s an “air pocket” where the path of least resistance is up because there’s less mechanical resistance until
$25.
The call-to-put ratio at these upside strikes is extreme — 214:1 at the June
$20 strike. That tells you positioning is overwhelmingly one-sided. Speculators are buying upside, no one is buying downside protection at these levels, and dealers have no offsetting long gamma to dampen the move.
Add in the equity-side fuel — over 60% of the float is shorted, with around 7-8 days to cover — and you have the three classic squeeze ingredients lined up: heavy short interest, dealer short gamma, and retail attention catalysing fresh buying.
What this means for shareholders: the price action you’re seeing isn’t being driven primarily by fundamental views on Groupon’s turnaround. It’s being driven by positioning mechanics. That’s a tailwind when the squeeze is building (which it is now) and a headwind when it unwinds (which it eventually will). Friday’s weekly expiry removes one layer of the gamma support, but the June positioning persists through to 18 June and provides structural demand into next month.
The takeaway is simply: understand that the next few weeks of GRPN price action will be governed as much by options expiries and dealer hedging as by anything Groupon’s management says or does. Watch the
$20 level — it’s the line where dealer hedging intensifies on the way up and reverses on the way down.
#GRPN #OptionsMarket #GammaSqueeze
