| This Trade Was Closed October 4, 2012 |
These puts expired worthless. GMCR ended up rallying up to 30 and then sold back down to 23, but only after the puts expired
Original Trade Post:
According to finviz, GMCR has a short float of 27%. That’s a pretty high short float, and from a bullish contrarian standpoint, that short float could portend a short squeeze since those short the stock eventually need cover, and that will cause the share price to go higher.
I do not know how long the data on finviz lags, but I believe that the short squeeze has already been playing out and most likely that short float is down in the low double digits by now. Notice how since Aug 1st, the stock price has rallied from 18 up to 26.
See my attached chart. I’ve circled periods of trading that appear to be short covering. Note that the strength of the short covering rallies has been declining. I think now is a good time to enter a bear trade on GMCR, as it reaches the top of it’s trading range 3 month trading range.
Trade Details
- The Ticker: GMCR
- The Trade
- Buy to Open Sep 2012 26 Puts at 1.84 or better
- Trade Opened: August 23, 2012
- Trade Closed: October 4, 2012
Chart courtesy Finviz. Click to open larger.
Additional Image Provided by Terrence:
Hedge your longs – Buy IWM puts in Option Trades (13 comments)
Bearish Trend reversal in Stratasys (SSYS) in Option Trades (1 comments)
Bearish trade on Masco ahead of earnings today in Option Trades (1 comments)
Bearish on AOL’s Triangle Pattern in Option Trades (2 comments)
Looking for APOL to fall with DV in Option Trades (1 comments)
This is not investment advice. Learning Markets, LLC is not responsible for errors or omissions. Please be sure to read our disclaimer.