TMC could moon on Friday
TMC (The Metals Company) is a recent "de-SPA C" that started trading on Friday. It’s a deep sea mining company with a market cap of $2.35 billion with 245 million shares outstanding (current price in the $9-9.50 range). The key thing here though is that 231 million shares are locked up at least 6 months and the 11 million PIPE shares are locked for at least a month (but perhaps longer because 2/3 of their PIPE didn’t pay up). Okay, so why do we care? Here’s why this is potentially one of the most explosive stocks we’ve ever seen this week: The current float is 2.72 million because 91% of the original 30 million shares redeemed for cash. The short interest is around 1.77 million shares (or roughly 65% of the current float is short). But here’s the "canary in the coal mine": the open interest. Market makers were selling calls based on the prior 30 million shares outstanding before last Friday, which means they’ve potentially sold much more than the entire current float. There’s 25k calls for 9/17 between $10 and $12.50. That’s 2.5 million shares. There’s another 8.2k calls for 9/17 between $14 and $15. That’s another 820k shares. That means if the stock is over $12.50 by Friday, MMs will need 92% of the current float to meet just September calls. If it’s over $15 by Friday, MMs will need 120+% of the current float to meet those calls. That’s just September. Add in those October calls (another 11.8k calls between $10 and $12.50 and another 7k calls between $14 and $15) and you’d require another 1.9 million shares for those… So if TMC goes over $15, MMs would need 190% of the current float to account for September/October calls. (And as I mentioned above 65% of the current float is short). I’m gonna be honest, I have never seen a situation like this (because the level of redemptions for recent de-SP ACs recently is unprecedented). MMs have to keep this pinned under $10 by Friday or all hell will break loose. Easiest way/lowest risk way to play this is just buy stock (which should go up 200-300% in a "gamma + short squeeze" scenario). September calls are super risky but will pay off in 5/10/15 baggers if the stock actually gets past $15 and rockets. October calls are lower risk than September but should still turn in 4/6/8 baggers if it gets past $15. Positions: 1000 shares of stock. 250 $12.50 calls, 200 $15 calls for Sept. As always do your own DD.
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September 14, 2021 at 07:18PM