1.) Look at their earnings, it was pretty fucking good with minor negatives. 2.) Special dividend of $1.1 with ex-div 3/8, pays out 3/23. 3.) Share buyback, low total float, large short interest.
What does this mean? RKT is a decent bet on mortgages, despite the whole COVID shit going on. Anyone following real estate should know that the housing market is booming right now. Now, RKT is a heavily shorter stock. When you short the stock and a dividend comes up, you have to pay the dividend because it's like you're reverse owning the stock. The $1.1 dividend is about 5% of the total share price, which is pretty noticeable. A share buyback in the long term is very bullish for the stock price, because the company buys back their shares in the market over time, reducing the float available, yet keeping the same market cap, I think. This is the opposite of share dilution, so in theory, the stock price should go up. So imagine a week where most of the shorts would be nearly forced to let go of their short position, following great earnings, and a share buyback that was announced. It's a recipe for RKT to blast off. The return of team RKT.
Strong resistance around $24. RSI at 70, bullish divergence. Strong support at $20 may not be seen anymore. These catalysts make it look like RKT will be able to break $25 with its pinky.
Bear case: The oscillations and resistance, supports can always double down or keep shorting. There's always the chance that institutions will short the company in order to build their own position, now seeing the earnings RKT had.
Safest play, selling CSPs at support. Optimal play, buy 100 shares to capitalize on the dividend and also sell CCs in case RKT pulls an Apollo 13. High risk high reward: yolo some calls and get yeeted into SPCE. SPCE and RKT included into ARKX when? lmao
I'm always on the lookout for another PMCC candidate, and RKT is cheap af and I've been bullish since IPO but I put RKT on the back burner. Maybe I'll toss AMD profits into this if I profit at all. Most of my other leaps are down right now and it'd be outside of my risk tolerance to open a new position while the other leaps are crying. I also really want to save my money for RBLX DPO, which is a few 3/10. If I bought shares, got them recorded and sold them on 3/9, I still wouldn't be able to fully play RBLX cuz the sales would have to settle. This would be playing with settled cash however. Made 15k on GME shares, so I might splurge a bit, 100 shares of RKT will allow me to spread out my RBLX buys.
Comment
⋅
Just checked the options chain, there's some big money in the 3/19's LOL. Fun fact: I use to just look at options chains and buy the calls that had the most volume. That was stupid. I'll be monitoring this situation closely.
Comment
⋅
steady climbing at $24
Comment
⋅
whoever hopped on the ride, congrats, bought 100 shares and sold a call for 3/12 above my strike to capture the dividend and the option premium, while getting max profit.
Comment
⋅
resistance at $30?
Comment
⋅
Fucking nice. 100 shares from $24
Comment
⋅
Uhhh, RKT is well above all the strikes on the 3/5 & 3/12 options chain. Gamma Squeeze inbound?
Comment
⋅
There is suddenly 10k-15k volume and counting on the 25p & 30p for 3/5. This will be fun to watch. Interest short position or hedges. Can this eventually crash down like AMC & GME? yea probably if institutions and big money is involved. the algos love playing off WSB.
RKT is a $100 stock all day long. It's undervalued at current levels. March 3rd should bring some great news. Lift Off & Short Squeeze soon.
Robs15
⋅
Great fucking work
KC4U2020
⋅
when should i sell it? i got 2k.
amfunk
⋅
@KC4U2020, idk but you could venmo or Paypal me that 2k if you want. No one ever lost money taking profits. You could also set stop losses
kyortic
⋅
Hello can you explain this comment?
"Fun fact: I use to just look at options chains and buy the calls that had the most volume. That was stupid. I'll be monitoring this situation closely. "
This is currently what I do, so how I can I change my strategy to be better? I'd like to learn more, thanks!
amfunk
⋅
@kyortic, So initially yea, I did that because I thought, "oh this strike has the most volumes, that means people are the most bullish on it, therefore it will be profitable". This is partially true, that's probably where everyone WANTS rkt to go to, but just because they want RKT to break $24/425, doesn't mean it will happen. Most options expire OOTM and worthless, if you ever get to the other side of selling options, you'll be happy to know what that means.
Liquidity is extremely important, but it shouldn't be the defining factor for choosing your strikes. Insane options volume can also be from institutions hedging a position, or positions being rolled out. I recommend learning about delta hedging and looking at my previous ICLN posts. Essentially, sometimes options can be used to control the stock price movement. Options were first created to be used to hedge stock movement, insurance protection if you will. But most stocks nowadays move because of institutions and whales.
Dave-FX-Hunter
⋅
Your analysis is great, thank you
amfunk
⋅
@Dave-FX-Hunter, hope it helps make you some nice plays, cheers