RE:RE:RE:Predicting closing prices on Option Expiration DaysYes Clem, it would be quite a large and expensive undertaking.
When someone buys a call option, the counterparties don't take risk, so they buy the stock. When expiry comes, they must be in a position to give the stock to the option holder, and they keep the premium. So yes, they have the ammunition to short, but it is risky to use. Borrowing more to short for the operation is risky.
However, when there is a situation of bias, where there are a lot of option holders on one side, it is kind of like ripe fruit hanging there for the picking. If they see there is no support under it, that gives them a potential opportunity. Will see.
We don't have the conditions for a gamma squeeze now, at least anywhere near like what happened to Gamestop last year. It is like a short squeeze, but with options. It requires a very large outstanding short interest by a parties that have to cover, along with an army of apes buying massive amounts of calls which force counterparties to buy more shares, causing the shorts to cover or go bankrupt. Billions lost.
Gamestop was ideal, it was like a lone stock without influences like the price of oil, or supported by other peers like the energy sector. Trying to smash the price of Suncor down on it's own would be tough, although smaller moves down on Opex day may be possible. Money from the sector would pour in like filling an ice cube tray as Suncor would be suddenly on sale for no reason.
In the end, I am aware, but I am not too worried about a big down move in March due to the outstanding call option bias alone. I am more worried about the likelyhood of a drop in oil price as a result of unwinding global tensions, which may cause a pause and consolodation extending into March before the next leg up.
The main trend is still positive, it is undervalued, and has a long way to go to catch up.
Clemxb7 wrote: Shorting SU all the way down to USD $19 would seem a large undertaking especially with Suncor themselves placing buy orders after February 10. That said the markets are fond of surprising you. Suncor does often sell off fairly hard for not always clear reasons.
Do you think, on the other hand, this situation creates a scenario where a gamma squeeze may instead take place?
I am hearing some not that crazy arguments in favour of price well in excess of $100 WTI. That is certainly in the realm of possible.