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Is there hidden rationality beyond irrationality?Gama Squeeze Happens between Quadruple Witching Dates When stock prices experience rapid shifts, the conditions may be ripe for a squeeze. In this scenario, investors may find themselves buying or selling shares of stock outside their normal trading pattern in order to minimize losses. A gamma squeeze is an extreme example of this, in which investor buying activity forces a stock’s price up. Gamma squeezes are often associated with options trading and they can be problematic for investors who don’t fully understand how they work. A short squeeze is a specific type of stock squeeze. With a short squeeze, an increase in stock prices can force people who shorted the stock to buy back their shares. How a Gamma Squeeze Works Certain conditions have to be met for a gamma squeeze to manifest in the market. It starts with investors making assumptions about a particular stock’s price. Specifically, they assume that the stock will rise in price. This leads to buying short-dated call options in the stock on a large scale. A call option’s value increases when the underlying stock it’s associated with increases in value. Meanwhile, this puts the institutional investors selling the options in a short position. If this pattern continues with investors sinking more money into call potions, that can force institutional investors to buy more shares of the stock. This is a necessary step for hedging against the short position they now find themselves in. The gamma squeeze happens when the underlying stock’s price begins to go up very quickly within a short period of time. As more money flows into call options from investors, that forces more buying activity which can lead to higher stock prices. Investors who purchased call options and sell when stock prices are high can reap sizable profits but the institutional investors who had to cover their short positions might see significant losses. (1) Now lets review 10 famous example in 2021: 1- NYSE:GME 2- NYSE:AMC 3- NYSE:BB 4- NASDAQ:BBBY 5- NYSE:NOK 6- NASDAQ:CLOV 7- NASDAQ:SOFI 8- NASDAQ:WKHS 9- NYSE:FSLY 10- NASDAQ:NAKD As you see all these spike patterns happened between Quadruple Witching Dates! What Is Quadruple Witching? Quadruple witching refers to a date on which stock index futures, stock index options, stock options, and single stock futures expire simultaneously. While stock options contracts and index options expire on the third Friday of every month, all four asset classes expire simultaneously on the third Friday of March, June, September, and December. Quadruple Witching Dates 2021 March 19, 2021 June 18, 2021 September 17, 2021 December 17, 2021 I believe a new round of Squeezing has just started and VLDR and GOEV, two of the most shorted stocks are just the tip of the iceberg. GOEV: Short Percent of Float 32.48 %, 32.3M, 10 days to cover..! VLDR: Short Percent of Float 16.06 %', days to cover 4.5 Do you know Which stocks have the potential to be the next Short or Gamma squeeze??? Reference Article: www.yahoo.com www.investopedia.com
NYSE:AMCEducation
by Moshkelgosha
24
FX Update: Trading the central bank normalization theme.Summary: The RBNZ is the latest central bank to remove policy accommodation among G10 currencies, with the Bank of Canada having led the charge in April and likely set to taper purchases again at its meeting later today. Today we look at some hopefully uncorrelated trades for the coming months as the normalization theme potentially deepens, and even in one case if it fails to do so. FX Trading focus: Trading the central bank normalization theme in G10 currencies Yesterday’s extremely hot June US CPI print saw a fairly modest impact across markets relative to the magnitude of the surprise. Sure, the USD did pick up in places and Fed expectations were jolted a few basis points, but there was no broad shift out of recent trading ranges, suggesting that the market continues to buy into the Fed view (or partial Fed view, at least, as dissenters are increasingly vocal) that inflation will prove transitory. Our view is that, while sequential month-on-month inflation measures are likely to moderate in coming months as some one-off factors fade, inflation is by no means transitory. Regardless, the market has respected that the Fed has shifted direction, so for USD bears to get the upper hand, the view will have to be confirmed that the Fed will lag in removing accommodation relative to the underlying fundamentals of real interest rates, current account deficits, etc... Overnight, the RBNZ surprised the market with its hawkish move as discussed in the trade view on AUDNZD below and I decided to dedicate today’s update to considering a few medium- to longer term trades that may play out from here if we continue to see a deepening in the move toward central bank normalization from here. Hopefully, the trades are somewhat uncorrelated, though it is unavoidable that the first three may share directional sympathy if, for example, we lurch into some deep correction in risk sentiment. Bank of Canada expectations today: a further taper and encouraging words – has USDCAD topped out here? Some trade ideas for the next couple of weeks to couple of months: NOK too weak? The Norges Bank is likely to prove the first G10 central bank to hike rates, having specifically forecast that it is set to hike rates in September at its June 17 meeting and forecasting a rate toward 1.50% by the end of 2024. The NOK has been in for a rough ride to the downside despite that hawkish upgrade, however, and that despite the surge in oil prices (normally very NOK supportive) as the market’s surprise at the FOMC meeting just the night before the Norges Bank on June 16 surprised markets and caught many USDNOK shorts off guard – with short covering in USDNOK a possible driver of the considerable downside in NOK. This NOK squeeze may be near completion as the focus could return to central banks normalizing rates and Norway leading the way. Trade: Long NOK vs. a basket of EUR, SEK and USD (stops if NOK is weaker versus all three and EURNOK, for example, trades north of 10.50 and USDNOK trades north of 8.90 while NOKSEK falls below 0.9700). Chief risk for this trade: a further squeeze on NOK longs on a chunky correction in crude oil prices or in risk sentiment if Fed Chair Powell spooks markets in testimony before Congress this week and this sees the USD rising further. EURGBP downside potential? Today’s strong UK inflation print has pulled BoE rate expectations back toward the highs for the cycle, while UK Prime Minister is expected to remove all Covid restrictions next week, which could further supercharge UK activity numbers and have the BoE pull forward its rate expectations more in line with the market’s expectation for a move early next year, it’s recent mimicking of the US Federal Reserve’s stance on inflation likely proving “transitory” notwithstanding. EURGBP is trading heavily today, and earlier this week, we have to remember that the ECB is preannouncing that it is warming up some reassurance that QE won’t quickly come to an end next year with new guidance updates at is meeting next week – a meeting very unlikely to prove hawkish. Further out, the chief focus will be on the August 5 BoE meeting. Trade: Short EURGBP at 0.8515 with a stop above 0.8620 for a test of 0.8300 (trading target: 0.8325) Chief risk for this trade: the ECB review next week comes out less EUR negative than expected or weak risk sentiment generally weakens conviction in the strength of the forward outlook for sterling bulls. Chart: EURGBP weekly EURGBP is pushing on the bottom of the range today after the UK print this morning, which has helped UK rate expectations back higher, a break of the 0.8500 area support could lead to a test of the major post-Brexit referendum support into 0.8300. AUD vs. NZD policy divergence too great – will reconverge? The RBNZ surprised last night by moving suddenly to simply abandon all QE purchases as of next week and removing language pointing to the need to wait considerable time for achieving its inflation and employment objectives. This points strongly toward a rate hike later this year. This is relative to Australia’s RBA, which has been extremely cautious in its moves and continues to express the view that it can wait until 2024 before conditions will be ripe for a hike. Either New Zealand is wrong to be so hawkish or Australia is wrong to be so dovish over a 6-month time horizon from here. Australia is also in the midst of dealing with a Covid variant outbreak after successfully dealing with the virus previously – a factor that could suddenly fade quickly once it rounds the corner as has been achieved elsewhere. The AU-NZ divergences are so strong between the two economies that we actually have a hard time seeing how they can stretch much wider from here with 2-year rate spreads at six-year lows, as the market has priced in considerable tightening from the RBNZ, while we expect if the normalization process continues to play out, the RBA caution will have proved excessive, leading the market to play catchup down the road. Trade: Buy half a position at 1.0600 and another half position in the vicinity of 1.0500 with stops below 1.0400 for an eventual recovery toward 1.0900+ as Australia’s commodity mix will prove more compelling for the requirements of green transformation (copper, even uranium, etc..). Will revisit if the price action reverts higher and keeps well away from 1.0500. Chief risk for this trade: simply that we are too early - the policy divergence between NZ and Australia could continue to widen, driving the AUDNZD pair below 1.0400. USD – Fed will continue to lag? While the US CPI print for June was a massive headline grabber and the USD has managed to rally off major support in the wake of the June 16 FOMC meeting, that move may have played itself out if the market shifts to the view that while the Fed is moving cautiously toward tightening, it will never be able to do so in earnest and will lag other central banks. A key test of this will be the FOMC meeting of the week after next. Trade: EURUSD 6-month call option, strike 1.2000, partially offset by 1.1500 put (total cost about 60 pips with spot ref: EURUSD trading at 1.1800 on July 14). An AUDUSD 3-month call option, strike 0.7700 (cost: 46 pips with spot ref: AUDUSD at 0.7457 on July 14). Stop on the EURUSD short put if spot drops below 1.1600 for more than two days. Chief risk for this trade: the FOMC meeting the week after next shows a more robust discussion of the need for the Fed to taper asset purchases, which sends the USD higher and risk sentiment lower. 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by Saxo
NOKIA is making one more push. NOKFifth wave of local impulse, making this one a relatively confident prediction. Plenty of momentum to move more and then reassess. No train can travel indefinitely after all. Remember, this is not financial advice. You must do your own research and carefully make decisions for yourself by yourself. We love TA and do not provide individually tailored financial advice, or financial advice period. Now that aside, Fibonacci in crystal clear green and invalidation noted, as always, in red. Good luck out there.
NYSE:NOKLong
by Rykin_Capital