I wanted to put together some of the recent squeezes so we can have an idea of what to expect, although with that run in AH to +60% makes me think that this might play out differently. Safest to exit at the Friday on 3rd Week of opex.
Large volume on the deep ITM calls has been the exit signal we’ve used recently.
ESSC december run.
Essc January run.
SST April run.
RDBX june run. (This one is a little different as they halted options on it on 15th/16th June.)
THCA April Run.
UW reporting that there was apparently 250k premium paid for 2.5 and 5c on Friday from floor traders which is odd. Doesnt show up on Yahoo finance or IBKR.
Is it big boys getting involved or hedging?
One of the known ways to manipulate a stock price is to exercise deep ITM calls and then sell the shares to drive down the stock price. Not sure if that is the reason for the purchase, but I guess my point is be careful.
Yeah a lot of low-float squeeze plays have these deep ITM calls bought at some point. Buying shares straight up raises the stock price (exemplified on low float stocks), but buying calls and exercising doesn’t. So it’s usually someone getting their hands on shares without raising the price just so they can dump them later. My guess is it is MMs preemptively making sure they have shares at their disposal to keep the price down and kill momentum.
Although it is interesting that they were bought before the free float was released. Maybe they were anticipating a small float ahead of time? I would doubt this if it were a no name ticker, but $FAZE is pretty famous so maybe the possibility of a low float was already on their radar.
There is a lot of good info on these type of plays in the $SST and $BBAI threads. They were 2 very similar plays to this one, one worked and one did not. You can see the different theories people had as they played out in real time.
Looking at the SST thread, this is the kinda volumes that were on the deep ITM calls that were around the time it dumped.
I remember on SST deep ITM calls were being bought as far out as 3 weeks before the squeeze. It was being dumped hard EOD for like days at a time. The play was really considered dead in my mind at that point and MM’s were in control.
However, a day or two before the squeeze SST had a really bullish earnings report and that’s what put it over the top. A mix of short covering, new investors, and good press on top of the already jacked OI chain helped ignite the squeeze.
Which kinda goes to my point that bullish news > everything else.
So while I wouldn’t consider these calls the death of a play, I do think they signal that MM’s are watching and won’t be blindsided.
I wanted to note that Reddit may be beginning to take renewed interest in FAZE. So bear this in mind when looking at volume and OI moving forward.
https://www.reddit.com/r/SPACs/comments/w6lif2/faze_30day_pipe_lockup_is_7x_the_current_float/
Is there any info on what exchange these traded on? SST had several weeks of deep ITM purchases on the PHLX exchange specifically, most likely as Phil pointed out a way to get shares without affecting the price. So if these trades were also on this exchange we could be seeing the same thing here.
My question is, isn’t this just passing the buck to MMs? Shorts will get their “shares” but now MMs would be on the hook for them
Will be curious (for personal reasons, as I am a holder) to see what happens with the warrants. They spiked to a high of $5.50 on the day of DA back in October, and held just under $1.00 in March/April.
On one hand, similar to ESSC, this is a low float pump and no one should expect the warrants to have any real value (in terms of being redeemable) any time soon, and shorts covering (or MMs hedging) don’t directly affect warrant pricing.
On the other hand, the warrants trade very thin (consistently a 0.05-0.10 spread even during the trading day), they are “undervalued” relative to the warrants of other recent completed SPAC mergers (e.g., PSNY warrants trade at $1.70 when the underlying stock is $9.00), ASTS warrants trade at $2.00 when the underlying stock is $6.50) and BRCC showed us that with a sustained retail pump, getting and staying over the $18 warrant redemption threshold is a real possibility, which would result in the warrants beginning to reflect intrinsic value at $5.00 or more. There is a PIPE unlock coming soon but as on other tickers, it will take a while for it to get registered.
Not necessarily recommending a trade, but I wonder if, with IV jacked on the options, warrants might be the best bullish play.
Full disclosure: I have a bunch at $0.61 basis.
Going to try to find how many public warrants there are outstanding. Edit: Looks like only 5.7 million public warrants outstanding.
I don’t know the exchange, my brokerage app doesnt show any volume on those strikes. Maybe @Kevin can see on his UW?
Deep ITM calls were also present on IRNT before it ran. So it’s not a 100% marker for not running like we seem to be theorizing here.
8/19 7.5P/2.5P bearish put spread filled for $1, in for the ride down, if it happens!
I can’t find any lockup for the PIPE shares. The PIPE shares are ~7x the float so I imagine once they get registered and EFFECT notice drops there will be massive selling pressure. But things don’t always work out like we expect (CVT) so be careful on position sizing.
EDIT: Corrected to 7x. For some reason I thought the current float was close to 1 million.
Looks like it built up the beginnings of a ramp yesterday. Trading above 17.5 would put nearly 100% of the float ITM.
Yesterday :
Today:
There was 2.7k volume on the 5c today, heres a chart comparing FAZE to the 5c.
Don’t think theres anything you can gauge from this but maybe someone smarter than me has an idea, maybe stock is being sold off to dampen the runs?
Looking at Kevin’s post below you can tell some of these are sells because of the slippage.
Big size flows on $FAZE lately. Kinda looks like the July 25 buyer closed their calls today on July 26? Not much of a profit though.
Updated OI, went up about 700 on the 15c and a couple hundred on the rest, even the 10c increased which is good to see.
Like with SI, CTB is a good number people can throw around that people get excited about. Not really expecting shorts to cover though as it’s too unreliable an indicator but could boost OI.
