GBA Presents: House of Gummy-!

Call volume on AAOI Sep $20s was frisky, the Option King Stoney should investigate. 6,365 calls active.
Call volume on AAOI Sep $20s was frisky, the Option King Stoney should investigate. 6,365 calls active.
They're playing games with this stock.

That call volume on those $20's, over 10,000 of those contracts were sold at the bid. That was a large shareholder doing covered calls or someone going naked. About $800K worth.

Look at the Dec $5 calls though.
3000 contracts, and those all went at the ask.

Who would buy $3 million dollars worth of calls that are $10 in the money on a $15 stock?

Why wouldn't they just buy 200,000 shares outright with their $3M, vs risking that much to control 300,000 shares with options?

I'll tell ya who. That's someone with a very large short position hedging their book because they think (or know :rolleyes: ) it's going up. But they still want to be short and not cover their position because they know the stock is waaaay overpriced. The $5 calls have the lowest premium and highest delta for the hedge.

They can ride it up now, and when they see the squeeze is getting ready to end (18% of the float is short btw), they'll dump those calls at their intrinsic value at however high it goes, and basically make bank riding their open short position all the way down to however low it goes. Which will probably be south of $10 in due time. Smart whale. Beautiful setup.
 
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They're playing games with this stock.

That call volume on those $20's, over 10,000 of those contracts were sold at the bid. That was a large shareholder doing covered calls or someone going naked. About $800K worth.

Look at the Dec $5 calls though.
3000 contracts, and those all went at the ask.

Who would buy $3 million dollars worth of calls that are $10 in the money on a $15 stock?

Why wouldn't they just buy 200,000 shares outright with their $3M, vs risking that much to control 300,000 shares with options?

I'll tell ya who. That's someone with a very large short position hedging their book because they think (or know :rolleyes: ) it's going up. But they still want to be short and not cover their position because they know the stock is waaaay overpriced. The $5 calls have the lowest premium and highest delta for the hedge.

They can ride it up now, and when they see the squeeze is getting ready to end (18% of the float is short btw), they'll dump those calls at their intrinsic value at however high it goes, and basically make bank riding their open short position all the way down to however low it goes. Which will probably be south of $10 in due time. Smart whale. Beautiful setup.


It’s hard to predict because AAOI usually retrace’s and so far it’s holding $14.7-$15.00. The intriguing part of the $20 call sells is the stock price was not crushed. Very interesting what ever is happening.
 
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