20-Year Pro Trader Reveals His "MoneyLine"
Ditch your indicators and use the "MoneyLine". A simple line tells you when to buy and sell without the guesswork. It’s a line on a chart that’s helped Nic Chahine win 83% of his options buys. 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.
High-flying video game retailer GameStop Corp. (NYSE:GME) was famously the most shorted stock in the entire U.S. market relative to its float prior to its massive short squeeze earlier this year.
Highest Short Percent Of Float Stocks: Here are the eight U.S. stocks with the highest short percent of float, according to Capital IQ and ZeroHedge:
- Workhorse Group Inc (NASDAQ:WKHS), 41.3% of float.
- IGM Biosciences Inc (NASDAQ:IGMS), 37.7% of float.
- GTT Communications Inc (NYSE:GTT), 36.9% of float.
- The GEO Group Inc (NYSE:GEO), 34.9% of float.
- Esperion Therapeutics Inc (NASDAQ:ESPR), 34.8% of float.
- Bed Bath & Beyond Inc. (NASDAQ:BBBY), 33% of float.
- DermTech Inc (NASDAQ:DMTK), 32.9% of float.
- Fulgent Genetics Inc (NASDAQ:FLGT), 32.8% 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.
20-Year Pro Trader Reveals His "MoneyLine"
Ditch your indicators and use the "MoneyLine". A simple line tells you when to buy and sell without the guesswork. It’s a line on a chart that’s helped Nic Chahine win 83% of his options buys. Here's how he does it.
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