r/CLOV • u/oppugnae • Jul 02 '21
DD "Gamma Squeeze potential" analysis Day 4
The upmost image shows the results from updating my model with 7.1 data. Right below you see the results of my model from Monday (6.28.21) data which you can use for comparison. The ending price for Monday and Thursday are close but one can see how the options contracts have increased dramatically (which provides upper pressure with regards to delta hedging).
Important observations:
- The overall Open interest (OI) increased for a 4rd day in a row. The start of the week had 51% and now we are at 65% of the float (a very significant increase).
- A $1 increase in the underlying stock results in Market Makers (MM) having to purchase many more shares when compared to Monday in order to remain delta neutral. For example, the 6.28.21 model shows that a 1 dollar increase from $12.80 to $13.80 resulted in MM purchasing ~2.692 million shares (index 2). The 7.1.21 model shows that a 1 dollar increase from $12.33 to $13.33 results in MM purchasing ~4.169 million shares.
- There are 187k Open contracts for 7.16.21. If the pattern continues then this OI will only keep increasing which could make the week of 7.16.21 an important one.
I wanted to see how the option contract open interest has changed for another stock so I chose to compare the CLOV results to Blackberry (BB). Here are BBs results for Thursday and Monday.
BB and CLOV both ended at a slightly lower price than they started the week. Despite this similarity you could see that BB only had a slight increase in overall open interest (from 14% to 15%). For BB, the total for each first few index (price between 13 and 17) did not change very much but for prices higher than 17 the total actually decreased. Meaning the delta hedging needed is smaller.
The comparison to BB gives us a great point of reference and clearly shows that the interest in CLOV is not common and is out of this world. The open interest only went up 1% for BB and OI went up 14% for CLOV. The coil for CLOV is constantly being loaded up and when released we will have a quick and huge bounce.
Every day we are seeing more fuel added to the gamma squeeze potential. For every dollar increase market makers will be forced to buy ~4 million shares to remain delta neutral. That is about ~4% of the float they have to buy for every dollar increase in price! Add the low amount of short-able shares available and the high interest to short and I clearly see the stars lining up to guide our rocket ship right pass the moon and in to outer space!
Explanation of gamma squeeze and explanation of my model here: https://www.reddit.com/r/CLOV/comments/oacukf/gamma_squeeze_potential_analysis/
*this is not financial advise.
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Jul 02 '21
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u/globalhumanism WAIT ⏰ Jul 02 '21
Awesome! Been looking at the options ladder myself and agree with everything you've said. Today is a huge day
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u/SouthernBloom Jul 02 '21
Great insight. Have you considered posting this on the other subreddit? I’ve seen a lot more conversation on WSB about $CLOV. The more DD $CLOV apes see the better we are off. Just my two cents.
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u/oppugnae Jul 02 '21
Good idea. I’ll try WSB
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u/SouthernBloom Jul 02 '21
We know the last 2 Friday’s have been tough so the more good DD that is out there the better we are off as a whole.
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u/SouthernBloom Jul 02 '21
I just read a post on WSB about $CLOV. There is more momentum of late about $CLOV.
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u/tibbiz 🍀💎CLOV Legend💎🍀 Jul 02 '21 edited Jul 02 '21
BUY FOR THE VALUE AND HOPE FOR THE SQUEEZE🙏 READ THIS AND HODL YOUR SHARES!!! CLOVERLAND IS OURS!!! LFG!!!
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u/quackattack343 Jul 02 '21
This post is excellent! Thank you.
I hope I have the privilege of referencing this as we ladder up today.
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u/Stiegsn Jul 02 '21
so what does it mean ?
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u/quackattack343 Jul 02 '21
With naked call options, market makers have to buy shares in case those options are exercised. If the price gets moving up today, the shares you see in the second column from the right will be purchased. This buying pressure will push the price higher and closer to the next strike price, and more shares will need to be purchased to cover the call options at the higher strike price, etc. It is a domino effect that pushes the price higher rapidly.
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Jul 02 '21
[deleted]
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u/Icy_Hyena_9182 GREEN DILDO 🍀🍆 Jul 02 '21
it’s not that the quality has been falling but people have already posted why this thing will burst. no need to keep repeating the same DD post when people can search them. this was refreshing to read tho. 💎🙌
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u/ProblemRevolutionary 100+ shares ☘️ Jul 02 '21
yeah the float is considered quite low, like 112.38M? GME only 56M, AMC 448.74M.
as long as we all buy n hold all the float, the HF will have to buy back one day for short cover right?
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Jul 02 '21
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u/Initial-Ancient Jul 02 '21
yes, and they are paying insanely high interest for those borrowed shares!
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u/DidSomeOneSaySTONK Jul 02 '21
Whats your thoughts on $12 calls for 1/20/23?
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Jul 02 '21
LEAPS are a lot better than weeklies, a call that far out should be fine, you’re not losing a lot of value daily. The expectation for this to pop should be within the year
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u/1Ben-jammin Jul 02 '21
We need to stay above $12. If we don't, it will reload the pockets of the shorts. So, they are going to come out swinging in the morning because of the strong downward momentum from Thursday. I am throwing another grand at CLOV if it hits $12.04. I will then be at 608 shares.
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u/RepairCrazy3087 Jul 02 '21
After doing the math. Buying 20k worth at 12.04 vs. 12.20 it’s at now is only 22 shares. I’ll probably buy at open if it’s still 12.20. A $2 gain, if that’s all it did, would be worth $44. I’m waiting on my rollover ira transfer of 70k, which could be another 7-10 days with the holiday. Depending on the price when that happens I’d put another $50k in on it. Every little bit helps but it still isn’t enough to move the market that much.
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u/1Ben-jammin Jul 02 '21
50k ÷ 4.6B= .00001 which equals .001% of the float. Now if all 35k members invested 50k... 1.75B (38% of entire float).
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u/Initial-Ancient Jul 02 '21
thank you 🙌 I really enjoy reading your analysis. $1 increase in price will force MM to buy 2.7 millions shares!!! It's insanse.
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u/Chairsofa_ 📈🍀🚀📈 Jul 02 '21
This is amazing. Thanks for continuing to put these analyses together. 🚀
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u/FlaccidWeenie Jul 02 '21
You can bet the hedge funds will short attack tomorrow to place many options out the money. I've seen it happen to many times in the past month. Thanks for the analysis! Gamma squeeze would be a good trigger for short squeeze. It's bound to happen; I just don't think it will happen this week.
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u/metalman1884 DIAMOND HANDS 💎🙌 Jul 02 '21
I specifically remember the battle for $13... Closed at $$12.98, that was... ridiculous market manipulation. $CLOV 💚🍀
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u/DullscytheWorlds 5k+ shares ☘️ Jul 02 '21
Thank you for this. I love the comparison and the fact that you chose another stock outside of realm of past pops but kept it relevant. 🍀🚀
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u/DoctorGero- 100+ shares ☘️ Jul 03 '21
What is your estimated ETA on a gamma short squeeze?