27% profit every 20 days?
This is what Nic Chahine averages with his option buys. Not selling covered calls or spreads… BUYING options. Most traders don’t even have a winning percentage of 27% buying options. He has an 83% win rate. Here’s how he does it.
Traders often look at short interest to get a sense of how many people are bearish on a stock and how strong the possibility of a short squeeze is. But simply looking at the size of the outstanding short position for a stock might not necessarily be the best indicator of how volatile a stock can be if the shorts begin to cover.
In recent years, some of the most extreme short-term spikes in the stock market have come from stocks with low floats rather than stocks with the highest short interest. A stock’s float is the number of shares that trade freely on the market, and it typically excludes shares of stock held by institutions and inside investors.
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Stocks with a high short percent of float represent stocks in which large quantities of the shares available to trade are being borrowed and shorted, creating a recipe for an explosive move higher if shorts are forced to cover.
“Most of these stocks are long-time shorts, but due to their high SI % of Float there is a very small chance that there will be any significant amount of additional short selling in these stocks due to lack of stock loan supply,” S3 Partners analyst Ihor Dusaniwsky said this week.
Dusaniwsky said downward price action in these stocks is typically due to longs selling rather than short sellers given the limited supply of shares available to borrow.
Highest Short Percent Of Float Stocks
Here are the nine U.S. stocks with the highest short percent of float, according to S3 Partners (minimum $50 million in short interest):
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- RealReal Inc (NASDAQ:REAL), 95.5% of float.
- GameStop Corp. (NYSE:GME), 79.0% of float.
- Peloton Interactive Inc (NASDAQ:PTON), 77.6% of float.
- Dillard's, Inc. (NYSE:DDS), 76.0% of float.
- Health Insurance Innovations Inc (NASDAQ:HIIQ), 68.7% of float.
- National Beverage Corp. (NASDAQ:FIZZ), 66.9% of float.
- Pennsylvania R.E.I.T. (NYSE:PEI), 66.5% of float.
- Yeti Holdings Inc (NYSE:YETI), 65.9% of float.
- Tailored Brands Inc (NYSE:TLRD), 65.1% of float.
Benzinga’s Take
Many of these stocks are already high-risk, high-reward stocks given the secular challenges their businesses are facing that attracted the short sellers in the first place. By ramping up the short percent of float of these stocks, it just adds rocket fuel to their potential volatility, making them extremely dangerous trades in either direction.
Do you agree with this take? Email feedback@benzinga.com with your thoughts.
Related Links:
16 Stocks With The Highest Long-Term Sales Growth Rate
15 Stocks Projected To Have The Biggest 5-Year EPS Declines
Photo by Dwight Burdette/Wikimedia.
27% profit every 20 days?
This is what Nic Chahine averages with his option buys. Not selling covered calls or spreads… BUYING options. Most traders don’t even have a winning percentage of 27% buying options. He has an 83% win rate. Here’s how he does it.