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**APRIL 22 UPDATE: HTZ got SSR on today, It may rebound.**
***11:00 am Zero shortable shares on IBKR since this morning. Borrow finally ticking up, 5.5% now. Ortex shows 1 million shorts piled on, total close to 10 million now, This won't budge, the spring keeps getting wound up.***
***11:50 am: SSR for today is 642.57. This has moved 150 in 3 hours! Don't you get it RV vs IV? Annualize it.***
***12:20 pm: SSR is on, the fun begins.***
Homework: [https://www.reddit.com/r/options/comments/1sr1bys/comment/ohd4i8p/](https://www.reddit.com/r/options/comments/1sr1bys/comment/ohd4i8p/)
And please share ideas after reading
Wasn't that some day?
EDIT: On IV being too rich right now. This halted 7 times today. Do the math on what a 5% move in 5 minutes annualizes to and you will be surprised! That is the reason it has been paying every day. That is the main options insight if you want to think about it.
Bigger picture for today, Stock was up 13% on Friday, 23% yesterday and now 17% today. The trap is still there. Per Ortex 320k more shorts today, short interest back to 9.08 million. Why do I say this is a trap? Well it comes down to mechanics, reg SHO requires that short selling can't be done on a downtick if the short sale restriction is triggered. Short sale restriction gets triggered if the stock drops 10% from the prior close. This means that shorts can at most push this down by 10%, any further down moves have to come from longs selling. This can certainly happen but in this setup it requires a natural seller to come to the market and sell by crossing the spread. My previous post talks about it. This means if you are short and the stock has risen by more than 10% in a day the odds are that you will be negative the next day and the day after. This is because when SSR turns on it lasts for the day and the next day. So now you likely sit around while the market either goes sideways the next day as well, and that is you best case scenario or worse goes up. Check out the history on yahoo finance and do the math. Look up the nasdaq short sale trigger times here:
[https://nasdaqtrader.com/trader.aspx?id=shortsalecircuitbreaker](https://nasdaqtrader.com/trader.aspx?id=shortsalecircuitbreaker) (just switch the date in the hyperlink)
This has been happening since the 27th of March and I was in this since April 2nd and sat there stuck. The other rule that applies for this stock is the LULD (halts). This is a tier 1 stock and the limit is 5% meaning this goes into a halt anytime it moves more than 5% in either direction in 5 minutes to the give the market a chance to breathe (I like this, that is why crypto is crazy 24x7 with no halts you wake up and BTC is down 50% exaggerates irrationality, that is why I have never yet traded crypto) EDIT: LULD bands double from 3:35 pm to 4:00 pm so 10%. Now for the shorts this is basically a second impediment and slows the progression down. You have no idea how much I cursed at these rules over the last two weeks. I mean the stock is irrationally high and it needs to be brought down, short sellers are doing a service, why are we getting F'ed doing this? That is why shorting is such a risky business. So now we have people from Friday, Monday and Today all trapped for 2 more days. So either they chicken out taking a loss and buying in the process pushing this further up or get auto liquidated by the broker. This is why they call it a "squeeze". So if anything the setup if even worse today, a lot more piled on and stock is up 17%. Everything I said yesterday is relevant, this keeps going. Or does it? Well there is always something from the left field when you talk about the markets. Let's see the current list of players in this match:
1. SRS and Pentwater (they hold 100+%) and they aren't selling. That is "my" assumption and I will stick with it for the rest of the analysis. You can disagree and that gives you room to play this your way. Read my previous post and some of the comments where I explain the reasons. Google it. Their strategy is different.
2. ETFs hold it passively. Look up the 13F holders list for CAR, there are websites that will let you lookup for free. 2-3 million shares with Blackrock and Vanguard. Those sit in their ETFs and mostly locked up. It depends on whether there is inflow or outflow from the ETFs for the day and shares trickle in and out. Right now market is risk on, and capital is slowly piling across the whole spectrum. SPY, QQQ were first but now small caps are in play too. So on the balance the ETFs are soaking up float for CAR. (Look up which hold it)
3. On 27th Avis declared 5 million shares of ATM offering. This will be the true new supply. We can't tell for sure but my conviction is that they are either done or almost done. Add up all the volume from the 30th on. 75 million shares. Easy to supply 5 million shares in that volume. Look up the VCX subs and their daily trickle. They have been supplying 10-15% of the volume every day and the market has stayed sideways mostly. 5mm of 75mm is only 7%. they are done or close to done. Of course it is tactical for them but remember even they can't predict the price. It is not very different from any of your situation when you hold a winning stock and are faced with the situation of whether to hold longer or sell. Well you ain't knowing the future so just DCA. That's all they can do. They also want to be done before the next board meeting to get books in order and plan some announcements. Meeting is on 7th May. So at this point I am not worried about them coming in to crash this. Even if they have some left this is so juicy to sit on the offer and soak out the buyside flow from the shorts. What implication does this have for the shorts? Well if you conservatively assume that they got $400 average price for the 5 million shares they made 2 billion. For the new 40 million share total that is $50 cash per share on the books. Of course you can do fancy DCF analysis but for a simpleton like me, the stock before the squeeze was 110-120 and now there is 50 cash so this ain't going below 170. Probably stays much higher. Because as I described above the SSR mechanics make it a long ride down. And sometimes market just hangs out. Again back to VCX example. $20 NAV went to $550 and has hung out at $100ish since then. It's been a month. That was one big reason for me to close out my short.
4. Pension funds, hedge funds hold it. Canada Pension Plan is a big one. These are run by fund managers with discretion. I wonder what they do. Obviously take some gains so they will sell. But this is about 1 million or so shares. They won't fully exhaust I think, just trim. So may be they have already done this, and if they intend to they are professionals and will know the dynamics so not crashing this (give it an outside chance they are not that smart, the world is full of surprises).
5. Long Short Quant hedge funds. These just auto trade baskets throughout the day. Think AQR, Two Sigma. They primarily use factor models like Barra/MSCI. These factors proxy in for the fundamental analysis part like P/E ratios etc. So it allows you to sort of add the fundamental piece in a Quant way, You generally don't analyze each stock individually. These see low borrow fee and float to short available and also see that stock is out of line with what the factors tell the model. So they can sell. I suspect some of the intraday LULD triggers are these. These funds operate on the whole gamut of holding periods from intraday to weeks. May be the quant looks at the daily performance and outliers but not sure how often they override and trade a stock on its own.
6. Wholesalers, these are the most interesting guys. They execute all the retail orders. Citadel, Jane etc. They have the best data on the whole situation. Retail orders come in and they know exactly which one is going short and who is long. They can build a fine grained picture of how much of retail that came to them was short and what time of the day. There are 3 big wholesalers and flow gets subdivided into them and they can extrapolate from their own flow to get the whole picture. They can calculate who is feeling how much pain. They model retail behavior and know what is the typical tendency of shorts when it comes to pain tolerance. Oh how I would love to have this data. Right now if the retail is going short all they need to do is build the long position knowing the mechanics (normally they exhaust most of it to not carry a big position overnight). They can then sell it back a few days later to make a killing. Nice ain't it? Well not so simple, the problem is that Citadel also has an options market making desk. They might be getting crushed and need deltas to hedge. The market is volatile and it is expensive to get deltas. Well you transfer over the wholesaler desk position over internally. The trader on the wholesale desk will complain because that was his PnL, he had the retail by the balls. So they mark his position to a premium and MMs at a discount and come end of the year his bonus is decided on this higher PnL. Net the firm doesn't go out to the street to pick up the shares. This is just internal trader accounting. Nothing prints on tape anywhere, nobody knows. So we can't say for sure what wholesalers will do. Likely holding it if Options is long delta. Well didn't I complain about how I would love to have this data. Let me show you something.
https://preview.redd.it/f63hhtgr5nwg1.png?width=1658&format=png&auto=webp&s=51beb9b09901bd18cd2ebc11094e6b0808a6d9c2
This is the net retail flow for Monday! How did I get this? Well look up databento and polygon.io. Pay up for the premium trade level data. Read this:
[https://utpplan.com/DOC/UtpBinaryOutputSpec\_3.0.pdf](https://utpplan.com/DOC/UtpBinaryOutputSpec_3.0.pdf)
Sometimes the most boring things are the most useful and nobody reads it. You can read this, think through it and pair it with the data to segment out the retail trades! I won't tell you anymore, consider this a Senior year final project. Will take you a weekend to figure out, you've got AI to help. What does this tell us? Well yesterday Retail started the day net long (buying) to net short as the market rose. Does this help? Not on its own. It can mean that retail longs rationally sold into a rising market. Or that retail got enticed by a rising market and went short who knows? Well I was obsessively looking at the IBKR shortable share count and it kept going down as the market went up. This gives me confidence that it is the latter, retail got short net. I mean come on anyone looks at this goes "tops in". Even though I don't have wholesaler level data but I think I know this with high confidence. I won't have today's data until midnight though so wait for it. But going by psychology the same thing happened today.
So reason over this, who has incentive to sell in the market in a way to crash it? I don't see anyone, all those people are smarter than me and you. This means it goes on. Or does it? Where are the mavericks like Andrew Left from Citron when you need him? He did the VCX short and I explained it here:
[https://www.reddit.com/r/VCX\_Fundrise/comments/1s4mljy/what\_citron\_did\_today/](https://www.reddit.com/r/VCX_Fundrise/comments/1s4mljy/what_citron_did_today/) (Read some of my comments in that post as well)
https://preview.redd.it/ewjtpzor6nwg1.png?width=619&format=png&auto=webp&s=bef07004b9f3b86125a15d7c9a7035db4575c28d
The problem is that the situation over there was different, no shorts trapped. And yes I need to acknowledge my mistakes. At that time I had thought that shorts had caused the VCX rally by getting busted u/AnyPortInAHurricane had castigated me by saying there "ain't any shorts in it". You were right man, I stand corrected, it was all hype driven. But moving on that doesn't apply here. The retail shorts are trapped and screaming for help. They will buy anytime this goes down. That's why it is so hard to push it down. I was wondering what happened today towards the close when it went down for a while. I was wondering if someone is trying to make it happen. But see what happened above.
See it needs a lot of capital and selling pressure to push this down. And normally there are two approaches to shorting. The fundamentals driven long term (AQR long/short baskets) or the volatile intraday push it down and buy back to close out within minutes. Guys on the first camp might already have left knowing they went short at 90 and it ain't ever going back there. The technical Citron kind of guys will find it too risky. Look at the red candles. You had to sell that many shares but then it comes right back up at you and runs you over before you can buy at the lower price. Too risky to profit from it. But as they say it, the moment makes a man. This is getting too juicy and it is a Billion dollar PnL idea for someone who can make this happen. Plenty of creative people are working on this as we speak. It is going to come from the left field. So think about this and if someone has any ideas please share. I would like to know, And yes when I posted my original post yesterday some of the responses were, "tops in", "too late now". Well remember, what is your edge? You just made a banal statement. You were proven wrong today. And I don't say this with a spite but if you think so please let me know how this will happen. Knowing this is so critical to position well for this. Otherwise it is exactly the same story as yesterday. I have learnt to stay humble and happened listen to Andrew Mack's podcast at the right time:
[https://www.youtube.com/watch?v=jlhuKAIenw0&t=1204s](https://www.youtube.com/watch?v=jlhuKAIenw0&t=1204s)
He mentions how retail doesn't cut losers soon and hold winners long. I had done all my analysis on the weekend, was up until 4 am looking at the data (reminded me of Uni) to piece it together. I risked liquidation on my account if I got this wrong and losing money if I closed out. The "tops in" crowd would have told me to keep holding. I had been grinding it for 2 weeks. I was sleep deprived and closed out for a 55k loss. Put yourself in my shoes. I had 11k on my options hedges, this could reverse and I lose it all. I have started trading a month ago and this would have erased most of it. So thanks Andrew, even though you will never see this but this helped when it mattered most. And now I am up 11k with 3 tickets left!
I had more thoughts but this is getting long, so some other time,. Please share any realistic ideas on how this resolves.