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Been chilling at my local System1 for 69 days. Smashing some Ho-Ho's and riding a shopping cart between aisles. It's been fun but taking the trip to the $BBAI based on some favorable technicals. We have stupid low float with 300% delta hedged in options. It's been consolidating on the wedge; ready for a breakout.
Keep it simple techy…
Volume and charting… we go through all sorts of short analysis, gamma charts, FTDs, greek this; greek that but sometimes we miss the simple technical. BBAI has 10% of the volume of System1 right now. I get it, System1 is my baby but the insane volume defeats the liquidity argument. Gotta let our babies fly off eventually. Somehow, the MMs have flooded the System1 streets with liquidity. BBAI on the other hand, its trading real thah-ickk. We like thin volume because it takes less firepower to propel price.
Lately, I've been finding a lot of value in the chart. If for anything, keep my head screwed on. BBAI has been consolidating after the initial run up into a slightly descending wedge. This indicates the potential for a major breakout (I called it on System1 and I'm calling it now on BBAI). By the looks of it, it's already started and I can barely bang out this analysis before it takes off. Ultimately, I think this wedge tells us, I'm not buying the top and I'm reading the market's opinion.
Talk Dirty Greeks to Me
We have low liquidity, trapped shorts, and solid gamma. Again, for liquidity we look at volume and the free float. There is a load of backstory on the float but it comes down to 1.05MM shares. If you want the gory details, check out the DD by ny92 (can't link cause on another sub) since he goes into extraordinary detail into the float calculation.
The short interest was 480,000 as of 3/31 (46% of float) but it's pretty clear that shorts piled in on the run up last week. I mean, CTB was 14% and today its 798% so… shorts are getting pretty greedy. We can further corroborate that by looking at the FTDs which are piling up (520,000 as of 3/14).
Lastly, I'd be remiss if I didn't drop some gamma on this play. We have a real bomb setup here folks, 300% of the float is calculated to be delta hedged. A huge gamma sits on the $15 strikes. This includes 4/18 rolling off and rolling into 5/20:
The Game and the Risks
I always say, play the game smart. Know all the dynamics both upside and downside. The IV is running at 1.65; System1 was at 1.5 before the breakout above $18. With that said, I still like ITM calls and shares personally. That allows me to play big delta swings without overpaying for my leverage. Ultimately, you do you.
The risks include dilution via warrants. The warrants need an EFFECT to be exercisable. The SEC is running super slow these days so who knows but needs to be considered as a present risk in the play.
BBAI is a quiet time bomb sitting on the sidelines while degenerates FOMO into tickers that have topped. We play the game smart by identify opportunities to buy before the rip. Volume supports a liquidity impulse and the chart shows a clear breakout beginning. We have 300% SI delta hedged and 46% SI (likely higher).
Position: (43) $10c 5/20