Jun. 17 at 1:00 AM
$ZVRA Okay, so let’s see if I can play Nostradamus for a moment here, and make some predictions based on what we saw today. Let’s break down the types of shorts who might start panicking before this Friday’s expiration, and what that could look like. First the ones who are most likely to crack early retail and small, speculative shorts. Seeing the stock hold above
$12 and the
$12 calls gaining value makes their losses real and immediate. They have the least staying power. Next, the leveraged hedge funds and short-term traders, the funds that use leverage or have tight risk limits, who begin feeling a significant level of pressure. If their stop-loss levels or risk models are triggered, they may cover to avoid larger drawdowns. Finally, the market makers hedging options, who often end up short stock, while hedging the calls they sold. As those calls move deeper in-the-money, they may need to buy back shares to rebalance, adding fuel to any upward move. Right or wrong, time will tell 😉.
