Think this could be arbs selling?
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Any funds who chose not to redeem, and don’t need their shares to cover calls they’ve sold, have likely sold into the float, yes.
But I don’t think you can reliably determine the float based on the price action.
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To elaborate: even if you assumed that roughly half of the volume from Friday and today was arb selling and assumed that that all call OI that existed prior to redemption deadline was covered calls sold by arbs (who didn’t redeem), that would only account for an aggregate of about 700,000-800,000 shares that were presumably not redeemed.
If you go look at cases where the extension redemption “worked” (ESSC 1.0 and THCA) and compare to when it didn’t (BWAC and BREZ spring to mind, but there are many), you’ll see its hard to determine much from the post-redemption price action. The best indicators seem to be (I) amount of call OI predating the redemption deadline, and (II) how much the sponsor does to ward off redemptions (FSPAs being a good indicator, trust additions or other sweeteners being a bad indicator).
The wild card here is the sponsor’s promise of an imminent DA. It’s hard to know what effect that has on institutional holders and whether to redeem for pennies or hold through redemption.
Having played nearly all of these (and having successes and failures) my advice is to be comfortable with the position you’re taking, realize it’s more likely to be a loss than a gain but it might still be a risk worth taking, and just wait for the official redemption numbers.
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Thank you, appreciate the explanation. I agree this is a long shot if it’ll pump or not but the r/r is usually good on these plays.
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at least people seem to be playing smart.
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I don’t know if im smart, but i believe in the group so im going to take a small position in the morning
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8k has been filed. I haven’t combed through this yet but wanted to get it in here ASAP:
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91.6% of shares redeemed
Just FYI. I am the volume for the July 15c. Tried to buy 20 that morning I first bought in, got 10, then 5 more later executed.
Looks like 5 million shares left. That’s too bad.
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I could be wrong on this, but wouldn’t the FPA agreement shares be subtracted from the float? If so, that would leave the free float around 3.5 M. Is this correct or are those already accounted for within the 5 M figure?
You’re correct. The FPA is part of the 5 million so that leaves 3.75 million shares that are free to trade. Still too big IMO.
Yeah, fair to say this is probably a play-killer.
I wouldn’t hold for the hope of a gamma pump just because substantial 10c OI has built.
If you’re holding July or later calls, or commons, be careful on rushing for the exit doors. You might get a slightly better exit by waiting a few days. There is also the chance of a DA before July opex, and if it’s a good target, there could be a bit of a pump (similar to what happened with ESSC when it changed targets and had a similar size float in the spring).
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Commenting on this to open back up. Some were talking about this on TF so what is everyone thoughts on longer out 10 strike calls or shares only around that 10 support?
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Shares would be safer. These plays are getting less and less popular.
For example BREZ right now has a 1.7M float with options and a $10.35 NAV. I picked up 12.5c for 0.05 on the news and they haven’t moved at all since. In fact they’re 0.00-0.05 now as opposed to 0.05-0.10 when I got them.
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Can’t trade $ALTU options on E*TRADE for some reason. Fuck E*TRADE. But I agree with Kevin that these plays have not been doing too well lately. Even a record low float like BREZ didn’t do much. However, I still think it’s worth the risk with shares as there is minimal downside at this level. Not adding cash to trust basically guarantees massive redemptions. Does anyone know what current NAV is?
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NAV on $ALTU is $10.05. Except for yesterday, there was very little volume above $10.05 so I think redemptions will come in high. Bad news is that they have a minimum tangible assets limitation of $5 million meaning that the float has a floor of 500,000. They have 5,055,051 shares in the public float currently. I estimate that this needs at least 80% redemptions for it to get attention. There is no new FPA that we know of.
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