I believe there is a rational correlation between extravagant price moves like what happened in GME, AMC, and recently SPRT spiral and quadruple witching dates!
These types of price moves are strange and unexplainable phenomena for newbies..!
Let me explain why this phenomenon happens:
Stocks with high short interest are often very volatile and are well known for making explosive upside moves (known as a short squeeze). Stock traders will often flock to such stocks for no reason other than the fact that they have high short interest and the price can potentially move up very quickly as traders with open short positions move to cover.
1- What Is Short Interest?
Short interest is the number of shares that have been sold short but have not yet been covered or closed out. Short interest, which can be expressed as a number or percentage, is an indicator of market sentiment.
Extremely high short interest shows investors are very pessimistic (potentially overly pessimistic).
When investors are overly pessimistic it can lead to very sharp price rises at times.
Large changes in the short interest also flash warning signs, as it shows investors may be turning more bearish or bullish on a stock. (1)
2- 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 is similar to the triple witching dates, when three out of the four markets expire at the same time, or double witching when two markets out of the four markets expire at the same time. (2)
By now you should have a clear vision about these unexplainable prices movements! I believe with good timing we can use this information to make money extravagantly..!
I checked multiple resources and this is a watchlist of the stocks that may experience the squeeze phenomenon in the next 2-3 weeks!
https://www.tradingview.com/watchlists/57513728/
Be careful this types of price movements have some criteria:
1- They do not last long
2- They tend to be volatile (intraday) because of Algorithmic trading involvment.
3- They experience large Gaps
4- There is a risk of entrapment (look what happened in SPRT on Friday)
5- You have to be careful with volume, they usually experience a trading volume of more than 100% of the total outstanding share!
6- Monitoring the change in short interest is key to success, huge change could be considered as last day!
7- This rationale could explain the reason behind many "Wall Street Bets" moves!
for more information please read my related articles:
Max Pain or Short squeeze?
Is there hidden rationality beyond irrationality?
What is "witching" and why is it quadruple?
Reference Article:
1-https://www.investopedia.com/terms/s/shortinterest.asp
2-https://www.investopedia.com/terms/q/quadruplewitching.asp
These types of price moves are strange and unexplainable phenomena for newbies..!
Let me explain why this phenomenon happens:
Stocks with high short interest are often very volatile and are well known for making explosive upside moves (known as a short squeeze). Stock traders will often flock to such stocks for no reason other than the fact that they have high short interest and the price can potentially move up very quickly as traders with open short positions move to cover.
1- What Is Short Interest?
Short interest is the number of shares that have been sold short but have not yet been covered or closed out. Short interest, which can be expressed as a number or percentage, is an indicator of market sentiment.
Extremely high short interest shows investors are very pessimistic (potentially overly pessimistic).
When investors are overly pessimistic it can lead to very sharp price rises at times.
Large changes in the short interest also flash warning signs, as it shows investors may be turning more bearish or bullish on a stock. (1)
2- 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 is similar to the triple witching dates, when three out of the four markets expire at the same time, or double witching when two markets out of the four markets expire at the same time. (2)
By now you should have a clear vision about these unexplainable prices movements! I believe with good timing we can use this information to make money extravagantly..!
I checked multiple resources and this is a watchlist of the stocks that may experience the squeeze phenomenon in the next 2-3 weeks!
https://www.tradingview.com/watchlists/57513728/
Be careful this types of price movements have some criteria:
1- They do not last long
2- They tend to be volatile (intraday) because of Algorithmic trading involvment.
3- They experience large Gaps
4- There is a risk of entrapment (look what happened in SPRT on Friday)
5- You have to be careful with volume, they usually experience a trading volume of more than 100% of the total outstanding share!
6- Monitoring the change in short interest is key to success, huge change could be considered as last day!
7- This rationale could explain the reason behind many "Wall Street Bets" moves!
for more information please read my related articles:
Max Pain or Short squeeze?
Is there hidden rationality beyond irrationality?
What is "witching" and why is it quadruple?
Reference Article:
1-https://www.investopedia.com/terms/s/shortinterest.asp
2-https://www.investopedia.com/terms/q/quadruplewitching.asp
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