I agree with Brad that the shorts are now under some pressure. We had an extra 100,000 shares trade today and most were on the buy side, or the stock wouldn't have gone up like it did. Tomorrow, when the Salomon coverage is publicized, we'll see more buying interest. Say Brad is right and the stock should have gone up another point. That's probably another 200,000 in volume over average.
The shorts have a choice: Increase their bet, or throw it in before things get pretty expensive. If they throw it in, let's call it Option (A), we go to the 12.5 strike price on Friday, I think. If they fight, Option (B),they probably have to short about 300,000 more shares. Then they would try to safely unwind their heavier position while transiting over to 12.5 December, etc., options (Wendell, stop me if I'm talking nonsense) for next month. I'm sure that's what Rob is rooting for.
Under Option B, we will see 10 on Friday and then head into a trading range of 10 to 12.5 over the next month, but trending up, if there is no more good (or bad) news. More good news early in that period, and I think that is more likely than not (i.e., INS deal), and we take a very nice bounce.
Any more good news this week (I don't think INS budget enactment is enough without a contract announcement) and we could be watching a very small, fairly modest squeeze play.
David
PS - Brad, thanks for the honor, and I am eagerly awaiting my secret decoder ring. |
