What started as a short squeeze has now led to a full blown gamma squeeze on FMG.
There has been a couple of 'intentional' pushdowns which were then used as fuel from catching shorts offside. Most obvious examples are 23rd Oct and recently 8th Nov. Things were made to look pretty grim both of these days and I imagine would have got many shorters very interested and very invested.
When the sp whipsawed MM's didn't need to do much heavy lifting to get to the next price point higher as short covering did most of it.
The issue and most likely a fair reason why we are seeing a huge spike in the last couple of days is now the gamma squeeze being put on dealers.
Looking at open interest for tomorrows expiry and to say it is heavily weighted toward ITM calls would be an understatement.
Obviously that means dealers are looking at some big payouts unless they do something about it and looking at the last couple of days and it's clear they've done something about it.
The options market plays a huge roll in FMG's price swings. If you're unsure of this then take a look at the chart then pick out the biggest moves and it's most likely these moves came on a Wednesday or a Thursday. Options obviously expire on Thursdays, so the day before and the day of are crucial for dealer positioning.
Now here lies the big question - is today the peak or will the squeeze keep rolling into tomorrow?
There's examples like 1st/2nd March where price pushed up then flew even higher on opex.
Then there's examples like 26th/27th July where dealers sorted positions by setting up then smashing price down on opex making tomorrow a real interesting one.
I can't answer that but I do know that next weeks expiry is much more light on so any squeezes have a pretty good chance of being unwound either tomorrow or Friday. So if you're looking for the ATH
@Exised then tomorrow could be as good a chance as you'll get (or if you're not greedy then perhaps today is a good opportunity to lighten the load - depending on your own views and positions obviously)
Another big data drop tonight in the US, so there's potentially more juice to this move or the air could get let out just as quick.
Looking at the short squeeze set ups and you'd think any pushdowns would find responsive buyers around $23 as shorters are caught below but obviously with such amplified moves come risks of overshoots (to the upside or downside)
I personally don't mind the R/R for Dec $24/$23.50 put spread as a punt play (with strength of move and tonights data drop have kept this position very light as could be a better set up tomorrow or Friday)
Currently trading at around 10c with a max return of 50c (most likely be looking at 25c-40c if goes well) it's not bad.
Similar trades can be found for those not looking to offload shares but looking to profit or hedge for any downside moves.
Anyway, most of trading for today was done very early AM in the US but FMG is one I'm certainly I'm watching with interest on ASX.
All the best, good luck whichever way you trade and always DYOR...
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