[HN Gopher] AMD Short Interest Has Grown by 234% in Nine Months ...
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AMD Short Interest Has Grown by 234% in Nine Months Reveals Data
Author : mgh2
Score : 65 points
Date : 2021-10-23 14:36 UTC (8 hours ago)
(HTM) web link (wccftech.com)
(TXT) w3m dump (wccftech.com)
| mgh2 wrote:
| Does this have anything to do with GME + Robinhood + WSB saga?
|
| https://hothardware.com/news/amd-robinhood-gamestop-gme-shor...
| programmertote wrote:
| For someone who is at the beginner level of financial trading
| knowledge, what does it mean for a particular stock to have high
| short interest? Does that mean there are so many people who are
| betting against AMD of late (meaning, that the market thinks the
| company is going to underperform in the near future)? Thanks in
| advance for your explanation!
| silisili wrote:
| Short interest refers to number of shares (vs number of
| people), but you've got the idea.
|
| I hesitate to write a lot because there's always 'well,
| actually' clauses that sends you down a rabbit hole(or off a
| cliff), but simplified it's people selling shares they don't
| own, with an agreement to buy them later. The hope for the
| short seller is that the price will be cheaper in the future.
| 300bps wrote:
| "Float" is the number of shares that a company has sold and are
| available to trade.
|
| "Short Interest" is the number of shares that have been
| borrowed and sold into the market.
|
| So having high short interest just means one or more people are
| betting the share price of AMD will go down so that they can
| profit.
|
| Buying a stock (aka a long position) has a finite level of
| risk. If you buy 1 share for $100 your risk is limited to
| losing $100.
|
| Selling a stock short (aka a short position) has infinite risk.
| For example, someone that sold 1 share of Amazon short in
| November of 1997 for $5 has lost over $10,000 factoring in
| Amazon's current stock price and the splits the stock has had
| over the years.
|
| When short interest is high the danger of a short squeeze is
| higher than usual. Picture what would happen if AMD stock price
| doubled. As everyone is buying the stock, short sellers would
| also be forced to buy the stock either to stop rampant losses
| or due to a margin call. This can make the price of a stock
| with high short interest rise dramatically.
|
| Good article on historic short squeezes:
|
| https://www.ig.com/en/trading-strategies/what-were-the-bigge...
| seoaeu wrote:
| No, there's an equal number of people* on the opposite side of
| those bets. If there was an imbalance between people thinking
| the stock is worth more than the current price and people
| believing the stock is worth less, then that would cause the
| price to move until it balanced out.
|
| *Technically an equal number of dollars
| mrweasel wrote:
| Wasn't that the problem with GameStop, the short sells had
| shorted more stocks than was actually in circulation?
| vdjao wrote:
| Identity A borrows a share from B. A sells the share to C
| in hopes of buying it back later at a lower price. C
| decides to loan their share to D.
|
| A: has one share loaned out
|
| B: owes A one share
|
| C: has one share loaned out
|
| D: owes C one share.
|
| Two shorted shares from one share
| mason55 wrote:
| That did happen but the latest SEC report showed that it
| didn't really have much impact on the price
| seoaeu wrote:
| The problem with GameStop was that many redditors _thought_
| there was more shorts than total stock available and that
| this would make it impossible for all of the short sellers
| to cover their position. In reality, a single unit of stock
| can be borrowed and sold short multiple times without
| really causing any problems
| ArtTimeInvestor wrote:
| I think it depends on the structure of the deals. I can
| imagine a structure where shorts _do_ signal an imbalance:
| A lends a share from B and promises to give it back in a
| year. A pays B a lending fee of $10. A sells
| the share to C for $100.
|
| Now C will make money if the price goes up by any amount. But
| for A to make money, the price needs to drop at least 10%.
| seoaeu wrote:
| In your example the bet is between A and B. If the price in
| a year is say $80 then yes A makes a $10 profit. But in
| that situation B loses the same amount: they started with
| $100 of stock, and a year later ended with $10 cash and $80
| of stock. Conversely, B makes a profit if the stock goes
| down by anything less than 10%. This is a really good deal
| for B!
| Jorge1o1 wrote:
| A stock can be sold short, meaning you receive cash from your
| broker now, and you promise to give them the share at some
| point in the future. This is pretty much a negative view on the
| stock because you're hoping you can sell to open at $120 and
| buy to close at $100 and keep the difference for yourself.
|
| Short interest is the number of shares in all the short
| positions that have been opened but not closed yet, and it is a
| bearish indicator. It doesn't necessarily mean that MANY people
| think the market is going to underperform though, it could
| actually be just a handful of hedge funds with massive
| positions.
|
| It also doesn't have too much to do with the long term
| performance of a company. It's probably better to interpret it
| as a view on the share price rather than on the long-term
| performance of the company. (interpreting any financial ratio
| or metric in isolation is tough)
|
| Another interesting implication of high short interest is this
| idea of "Days To Cover" which is short interest / average daily
| volume.
|
| In situations where days to cover is very high, shorts can find
| themselves unable to close their positions, even though the
| market is moving away from them (aka up). This leads to a short
| squeeze - famously with GME this year.
| agumonkey wrote:
| I'm surprised some wealthy cryptonerd didn't tickle this
| stock GME style.
| kklisura wrote:
| > A stock can be sold short, meaning you receive cash from
| your broker now, and you promise to give them the share at
| some point in the future.
|
| Just like OP, I'm also at the beginner level at financial
| trading, but I think you're explaining either options or
| margin with your first sentence, right? With shorting you
| borrow a stock (where you pay interest on it) and immediately
| sell it. When the price of stock falls, you then buy it and
| return it. Is this correct?
| seangrogg wrote:
| So your parent _implied_ borrowing and selling the stock
| immediately to "receive cash from your broker now" and by
| doing so they are required to return the stock (unless the
| company goes bankrupt). In this way, you are both correct
| about what shorting a stock is.
|
| However, options are NOT like this. With options, the write
| side could receive a premium on their side of a contract
| for guaranteeing either to sell the shares at a specified
| price (a write-call) or guaranteeing to buy the shares at a
| specified price (a write-put). In either case, the person
| buying that contract can choose to either execute that
| contract or let it expire, meaning it could be the case
| that the writer (who receives a premium) may never have to
| act further (because the contract buyer never executes it,
| so the writer just pockets the full premium).
| short12 wrote:
| Amd is the whipping boy of wall street for the last two decades
| with high levels of shorting along the way. I wonder how many
| shortsellers they've destroyed over the years
| quickthrowman wrote:
| The short interest is mostly a merger arbitrage play--AMD is in
| the process of acquiring Xilinx.
|
| When a merger happens the acquirer falls in value and the target
| rises in value (in general).
|
| I'm long AMD.
| darth_avocado wrote:
| I don't like clickbait titles like this.
|
| > short interest has grown 234%
|
| If the original interest was 1% of the float and now it's 234%
| grown, it is still an insignificant number. You'll always see
| about 5% short interest in the healthiest of the companies, it's
| when it starts going nuts like amc when you pay attention.
| mettamage wrote:
| I once made a 20x return (I bought Cardano for fun in 2018).
|
| On $33. That's still $666. But if it was $1000, it'd have been
| $20000.
|
| So there's that.
| CyberDildonics wrote:
| What does this have to do with the current thread?
| kbenson wrote:
| It points out that percentage of growth is a valid and
| useful metric depending on the situation. As root comment
| noted, it doesn't matter much if it was very small, but
| that's not always the case. Additionally, absolute numbers
| aren't always useful for similar reasons, but affecting the
| opposite spectrum. A headline might note something has
| risen by billions, but if that amounts to growing by 5%, is
| that really any better of a way to represent things than
| growing a large percentage on a small amount?
| mettamage wrote:
| This is the point indeed. I once doubled my revenue one
| day, it went from $2 to $4. You think I joke but I was a
| kid back then. As a kid it was _actually_ quite
| meaningful to double that particular amount.
|
| Now I wouldn't care about having a 100% return on $2.
| Perhaps if there's a principle behind it that's
| interesting I might care, but I wouldn't care much about
| the money made.
|
| But having 100% return on $2 million. Well, let's just
| say I'd care.
| alimbada wrote:
| It's WCCFTech. They're well known for clickbait.
| ksec wrote:
| While WCCFtech has gotten quite a bit better after all the
| bashing from 2016. It is still no where near good enough to
| be on HN.
| evadne wrote:
| This is old news from August
| bryanlarsen wrote:
| Short interest has declined significantly since August.
|
| https://www.marketbeat.com/stocks/NASDAQ/AMD/short-interest/
| oblak wrote:
| Is it too late to buy more AMD stock? Got mine back at $11 and
| looking at what it is now, I can't help but want to kick own ass
| my for being a pussy and only dropping a few grand.
|
| In any case, thank you Mrs Su
| mccorrinall wrote:
| _Purely technical speaking & NFA_
|
| Right now? Yes, too late. Price at the beginning of October was
| 99.51 USD, now it's 119.83 USD. 20% increase since the 99.51
| re-test.
|
| But you could buy some put options, since we reached the same
| level of resistance as in August. Imo it's not a bad idea to
| secure your position against a pullback, especially since the
| earnings are announced next week!
| oblak wrote:
| Price was about 90 USD this time last year. Not a huge gain
| in 12 months. I really don't get what prompts AMDs highs and
| lows. I am sure it was like 107 just a couple of weeks ago
| and they haven't had any major new announcements yet. Just
| reaffirmed what was already known, no?
|
| Any links you could share? I've been trying to avoid seeking
| alpha. Is that a mistake?
| Bombthecat wrote:
| And then you have stocks like tesla, where we left
| reality..
| BryanBeshore wrote:
| I feel the same with CloudFlare ($NET). But be happy you got in
| on at least something.
| oblak wrote:
| I wanted to buy at $2 but got caught in a series of personal
| issues and didn't have the time. There went my only chance of
| ever making any serious money. I had a feeling things were
| going well, just not this well.
|
| After all AMD went to 30+, then dropped to 18 and stayed
| there for a while. As I said above, I really don't get it.
| Almost blind luck I made any money at all.
| alimbada wrote:
| Buy XLNX if you decide to buy. Once the merger goes through
| XLNX shares will be converted to 1.723 AMD shares.
| logronoide wrote:
| Things have changed since the articule was published. The trend
| goes downwards:
|
| https://www.nasdaq.com/market-activity/stocks/amd/short-inte...
| gnarbarian wrote:
| a war over Taiwan with TSMC right in the middle would certainly
| cause some issues for AMD.
| reacharavindh wrote:
| I know you meant that casually, but I think it could be an
| American powerplay to keep China in check. If historical
| American influence are any indicator, they are not going to sit
| idly by and watch China achieve great feats and eat away
| American domination. They are probably strategising right now
| to stifle this growth. If so, TSMC could become a collateral.
| Intel would become the American reliable silicon provider for
| the western world.
|
| I feel like a conspiracy theorist saying what I said, but a
| part of me seriously believes USA is capable of doing and
| thinking exactly like this.
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(page generated 2021-10-23 23:02 UTC)