XPDI - short and gamma squeeze

XPDI - Mining and AI Infrastructure Short squeeze XPDI - Incoming short and gamma squeeze XPDI - Incoming high redemptions leading to short + gamma squeeze After merger company will trade under CORZ. TLDR: XPDI is likely to post large redemption numbers after merger vote tomorrow, causing a significant short squeeze which can cascade into a gamma squeeze. Shares and OTM Jan+ call options are best bets. EDIT!!!! There’s a lot of downvotes or comments downplaying what I’m saying. This isn’t something new I’ve made up, google is your friend: https://markets.businessinsider.com/news/stocks/spac-short-squeeze-investors-redeem-shares-mergers-complete-2021-8 Overview on merger https://www.sec.gov/Archives/edgar/data/1839341/000121390021037837/ea144540ex99-2_poweranddigi.htm This is actually a great company. They do green energy infrastructure and holding for all new technology platforms Why can XPDI short squeeze? (1) High redemptions can cause short interest as a percentage of float to skyrocket. With the “current” float of 43.13 shares, short interest of 1.77m shares is just 5.55% of the float. However, here are what different redemption numbers do: 80% redemptions: float will be 8.626m shares and short interest will be 21%. 90% redemptions (SOAC was 90.9%), float will be 4.3m and short interest will be 41%. (2) There’s NO PIPE!!!! Why can there be large redemptions? (1) it’s been a crappy month and the share price stayed below $10 last week. I personally bought a bunch of shares and redeemed them. Shares always traded under $10 for months prior to merger and throughout the redemption period. Arbs come in and purchase shares for a few cents under $10, then submit shares for redemption. While the return may seem small (just 0.5-1.0%), arbs are actually compounding this throughout the year. If they were to get an average return per trade of just 0.7% and repeated it for 15 SPAC mergers in a year, their annual return would be ((1.007^15)-100)*100% = 11.03%. So they’re getting a COMPLETELY RISK-FREE 11% return, beating the long-term SP500 average of 8%. SOAC had a redemption price of $10.002 and similar pre-merger price action pre-merger, so we can assume similar arb action here. (2) Amazing Target CORZ will have a massive infrastructure to run AI, meta etc platforms while crushing profits due to energy sources being renewable . BLACKROCK ARE INVESTORS Why can XPDI gamma squeeze? (1) The options market is glitched right now. Stocks with such tiny floats normally would not be allowed to have options available, but the SPAC redemption process offers a loophole. For example, IRNT has a float of just 1.23m shares but on last Friday after it gamma squeezed in after hours, the open interest on ITM calls became ~37,700 contracts, meaning MMs were on the hook to deliver 3.77m shares, ~3x the entire existing float. So for other SPACs like XPDI, a relatively small number of OTM call contracts can cause a gamma squeeze if the stock experiences a short squeeze. (2) Long options chain. As the OI on OTM call options increases and share price rises from a short squeeze, MMs will be forced to gamma hedge to reduce their risk profile. The longer the options chain and the more volatile the stock, the more aggressively MMs will have to hedge. XPDI has strikes available up to $25, whereas SOAC only went up to $20 (since expanded). As share prices rises during short squeeze, MMs increase hedging. Upside potential - compare to SOAC SOAC had short interest of 1.8m shares and post-redemption float of 2.73m shares, leaving short as percent of float of 66%. Following this, SOAC spiked 28% and option premiums jumped 100-500% across the chain. XPDI has potential to move even higher with large redemptions due to larger short interest, meaning increasing IV can lead to triple digit % returns. If we get a TRUE gamma squeeze, returns can be 10-100 baggers (see IRNT as example). Strategy: Shares and January call options are the best strategies here, avoid warrants (XPDIW). Shares are lower risk and more liquid, while options are high risk but extremely high reward. Downside on calls is 100%, upside is 100-1000%+ (and more if super gamma squeeze comes in, IRNT-style). I sized small here due to the high-risk nature of this play (betting on redemptions), but the upside is still great. I hold mostly Jan calls with strikes from $10 up to $25. Disclosure: I’m not a financial advisor, do your own DD. SPAC mergers are risky plays and options even riskier. Only trade what you are willing to lose! Positions (sized small due to associated risks): 7500 shares 1550 Jan options

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XPDI - short and gamma squeeze

bullish

XPDI - Mining and AI Infrastructure Short squeeze

XPDI - Incoming short and gamma squeeze

XPDI - Incoming high redemptions leading to short + gamma squeeze

After merger company will trade under CORZ.

TLDR: XPDI is likely to post large redemption numbers after merger vote tomorrow, causing a significant short squeeze which can cascade into a gamma squeeze. Shares and OTM Jan+ call options are best bets.

EDIT!!!! There's a lot of downvotes or comments downplaying what I'm saying. This isn't something new I've made up, google is your friend: https://markets.businessinsider.com/news/stocks/spac-short-squeeze-investors-redeem-shares-mergers-complete-2021-8

Overview on merger

https://www.sec.gov/Archives/edgar/data/1839341/000121390021037837/ea144540ex99-2_poweranddigi.htm

This is actually a great company. They do green energy infrastructure and holding for all new technology platforms

Why can XPDI short squeeze?

(1) High redemptions can cause short interest as a percentage of float to skyrocket.

With the “current” float of 43.13 shares, short interest of 1.77m shares is just 5.55% of the float. However, here are what different redemption numbers do:

  • 80% redemptions: float will be 8.626m shares and short interest will be 21%.
  • 90% redemptions (SOAC was 90.9%), float will be 4.3m and short interest will be 41%.

(2) There's NO PIPE!!!!

Why can there be large redemptions?

(1) it's been a crappy month and the share price stayed below $10 last week. I personally bought a bunch of shares and redeemed them.

Shares always traded under $10 for months prior to merger and throughout the redemption period. Arbs come in and purchase shares for a few cents under $10, then submit shares for redemption. While the return may seem small (just 0.5-1.0%), arbs are actually compounding this throughout the year. If they were to get an average return per trade of just 0.7% and repeated it for 15 SPAC mergers in a year, their annual return would be ((1.007^15)-100)*100% = 11.03%. So they're getting a COMPLETELY RISK-FREE 11% return, beating the long-term SP500 average of 8%. SOAC had a redemption price of $10.002 and similar pre-merger price action pre-merger, so we can assume similar arb action here.

(2) Amazing Target

CORZ will have a massive infrastructure to run AI, meta etc platforms while crushing profits due to energy sources being renewable .

BLACKROCK ARE INVESTORS

Why can XPDI gamma squeeze?

(1) The options market is glitched right now.

Stocks with such tiny floats normally would not be allowed to have options available, but the SPAC redemption process offers a loophole. For example, IRNT has a float of just 1.23m shares but on last Friday after it gamma squeezed in after hours, the open interest on ITM calls became ~37,700 contracts, meaning MMs were on the hook to deliver 3.77m shares, ~3x the entire existing float. So for other SPACs like XPDI, a relatively small number of OTM call contracts can cause a gamma squeeze if the stock experiences a short squeeze.

(2) Long options chain.

As the OI on OTM call options increases and share price rises from a short squeeze, MMs will be forced to gamma hedge to reduce their risk profile. The longer the options chain and the more volatile the stock, the more aggressively MMs will have to hedge. XPDI has strikes available up to $25, whereas SOAC only went up to $20 (since expanded). As share prices rises during short squeeze, MMs increase hedging.

Upside potential - compare to SOAC

SOAC had short interest of 1.8m shares and post-redemption float of 2.73m shares, leaving short as percent of float of 66%. Following this, SOAC spiked 28% and option premiums jumped 100-500% across the chain. XPDI has potential to move even higher with large redemptions due to larger short interest, meaning increasing IV can lead to triple digit % returns. If we get a TRUE gamma squeeze, returns can be 10-100 baggers (see IRNT as example).

Strategy:

Shares and January call options are the best strategies here, avoid warrants (XPDIW). Shares are lower risk and more liquid, while options are high risk but extremely high reward. Downside on calls is 100%, upside is 100-1000%+ (and more if super gamma squeeze comes in, IRNT-style). I sized small here due to the high-risk nature of this play (betting on redemptions), but the upside is still great. I hold mostly Jan calls with strikes from $10 up to $25.

Disclosure: I'm not a financial advisor, do your own DD. SPAC mergers are risky plays and options even riskier. Only trade what you are willing to lose!

Positions (sized small due to associated risks):

  • 7500 shares
  • 1550 Jan options
read-time
3 min
11.00
Target Price
8/ 10
Confidence
1-2 Months
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