Submitted by [deleted] t3_yy34nl in wallstreetbets
Not going to waste people's time here. We all know the game by now.
UPST is a shorted stock near all time lows, one of many in the various baskets. Was on regsho, came off, went right back on. High short interest. Borrow rate spiking. Lots of FTDs. Low liquidity. Low-ish float.
No I'm not talking about a squeeze. Just profitable shorts realizing some of that profit.
Most traders who play shorted stocks know that monthly opex is this friday, maybe we see some price improvement (if covering occurs) tomorrow through Tuesday into the T+2 settlement window. Maybe covering will occur earlier due to the holiday next week for US markets. Maybe no covering occurs at all.
Ok so the interesting part:
A lot of the shorted basket stocks saw a lot of deep ITM puts traded today. Millions of dollars worth of options contracts traded across each and many of the basket stocks.
UPST, closing the day at 19.46 had about 88 million dollars worth of Jan '23 puts traded at the 590 and 360 strikes in the last 30 minutes of the day. A lot of other shorted stocks had similar activity, but spread throughout the day. Not going to list them for a couple reasons: Automod. And UPST is the only one currently on Regsho. Not that Regsho means much...but it did mean something for Gamestop in late 2020.
Maybe UPST will run by next week, maybe it won't.
IV on Dec and Jan OTM calls has been rising as the price has been dropping. Calls becoming more profitable as the price of a stock drops? Hrmm...
Either way, it's odd. It's compelling. It gets me excited.
Marked as discussion because I will flatly state that I don't know what this accomplishes. I am not versed in advanced options trading strategies. Price suppression? Bear spread? Risk Reversal? FTD clearing? Arbitrage?