Title. How does a stock move so violently without any news from the company?
In: Economics
Anyone who replies “because DFV tweeted” has utterly no idea what’s going on. Reading replies like these are frustrating as hell… a tweet does not cause 170,000,000 shares to be purchased “by retail” on a single day. In fact if you look at the volatility and volume of the share for the week prior to yesterday (starting 34 days passed the March options expiry date) you can see the volume share to drastically increase.
The answer is, the real reason is not yet understood but there are a few theories which can explain it, or potentially a few things happening concert.
Working ideas are: XRT ETF failure to delivers are getting harder and harder to rollover and kick down the road. These have increased over the last 2 years.
Long term Basket swaps are expiring and this is a cyclical event, shorts never closed they covered, there’s a difference.
Inside buy back, this is due to some interesting screen shots from Bloomberg terminals.
Option gamma thesis; it was theorized that if the stock went to around $15.XX it would rocket to $36 because of option chaining. This happened last week into yesterday. Typically the upward momentum is stopped where the chain stops at (unless it’s an expiry date and the options are exercised) because there’s no calls for higher strikes. The calls contracts stopped at 36.00 strikes, until yesterday. today they will open more up at higher strikes. The share price will continue to rise if these are filled, likely capping at $55.00 per share on May 14th. This cycle should continue into early next week if new calls are opened and purchased as we approach the expiry date of Friday.
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