Before the Quebec sexy nurse party. We would have ran hard the last few days. Tilray is up 200 percent. Why?
I did a lot of research tonight as I wanted to know why Namaste has so much volume the last few days and if there was MORE to this current run. Everything is running. Is it just US related or more. This is my conclusion:
A Merger Arbitrage with Tilray & Aphria:
Merger arbitrage, often considered a hedge fund strategy, involves simultaneously purchasing and selling the respective stock of two merging companies to create "riskless" profits. Because there is the uncertainty of the deal being completed, the stock price of the target company typically sells at a price below the acquisition price. A merger arbitrageur will review the probability of a merger not closing on time or at all and will then purchase the stock before the acquisition, expecting to make a profit when the merger or acquisition completes.
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A Gamma Squeeze is happening to Tilray. This rise has a direct correlation to other MJ stocks running. Tilray also just signed a massive deal in the UK.
https://www.google.ca/amp/s/www.fool.com/amp/investing/2021/02/09/tilray-strikes-deal-to-export-medical-marijuana-to/
A “Gamma Squeeze” is an outcome based on an investor using many options to drive up the prices of select stocks due to option sellers needing to hedge their trades on the underlying stocks.
The Process
1. The squeeze can begin when a large investor, typically referred to as a whale, buys short-dated call options in a frenetic pace of stocks that they typically own.
2. The banks or brokers that sell the call options will typically buy the underlying stock so that they have very little or no net exposure. The more call options the investor buys, the more shares the brokers that sold the options will have to buy to ensure they are net flat. Brokers and dealers are motivated by the commissions and do not want to hold a trade either long or short.
3. The option purchases force the dealers to buy the underlying stock, which can push the share price higher. If pulled off, this creates a positive feedback loop, thus can drive underlying stock(s) price higher for a period of time. In a roundabout way, the dealers must buy more and more of the underlying. All said and done, this is the Gamma Squeeze.