Among the stocks that skyrocketed last week there was W (WayFair). In a couple of days it went from the high twenties to the low forties, fueled by the covering of the large amount of sport positions (38% of the outstanding shares).I mad some money on this rebound with the nov call46. However now I am tempted to enter again and I was wondering in anyone else was playing this trade.
Looks like another beneficiary of the pandemic. As far as I can tell it was only profitable in 2020-2021 and is back to massive losses. As long as the short squeeze exists it goes up but another bad print of the PPI or CPI and it will go back to $28. In the August rally it went up 67% so its almost there already. This is an amazing stat that explains the incredible comeback (from TD Ameritrade): % Held by Institutions 115.05 Short Interest (% of float 10/31/22) 30.50
Your way of trading (or rather investing) is quite typical. Many newbies do such a thing too. I don't see any short squeeze. It must be a badly managed company. Are the board of directors and top management still around? Will it go below the low of 28?
I agree with your points, just my dataframe is rather narrow, November 18, and I am hoping to capture heavy movements in this period. Just to tell you the whole story, I was heavily short on this stock too with puts 28.5, 29.5 and 30. And I was making a lot of money until Tuesday opening, which almost zeroed my gains (it went up to 36). After a little investigation, I came to the conclusion that it was a short squeeeze because of the huge amount of short outstanding shares. So, instead of selling my puts, I reversed my position and I bought quite a bit of Nov 18 calls with the following strikes:41.5, 43, 46 ad 50. Somehow this strategy helped to cut my losses, because I already resold at double price the 46 calls, but I was hoping for some more action on the upside. I still own my puts, but I am afraid that they will expire worthless in a few days. Just out of curiosity: Why you think that a 115% (?) owning by Institutions helps the short squeeze?
I was referring to the 30% short interest which is incredibly high and the short squeeze traders will be gunning for this. Looks like the PPI was favorable so W should go a lot higher. I would say at least to the high $40s / low $50s. This rally seems to have more legs especially with the Thanksgiving/Christmas season coming.