$ZIM short squeeze potential

$ZIM has 118.6M shares outstanding. I accounted for DB's recent sales and created an 'adjusted float' of 69.7M shares. Only 3.4M shares are directly sold short. This gives an indication of MMs low interest in shorting ZIM...which makes sense because they would have to pay a very hefty dividend in March (likely north of $10/share). They have sold so many call options that are now in-the-money or close to the money that they've grown their effective short positions to quite large numbers. Now a 20% short wouldn't necessarily cause a squeeze in-and-of itself, but for a company cashflowing like this, and with a huge dividend payment coming up in March, MMs will face a tough decision of: buying back the stock to close their short positions buying calls, creating a gamma squeeze and driving IV through the roof paying $10/share in March and $2.50/quarter thereafter The rapid price movement the past few days has only made me more confident in this hypothesis. Please note that the dividend will probably not adjust options prices, so it may not make sense to hold options that expire in/after March. If you're going to go that far anyways, just take the shares (which could still 2-3x) and collect your divy.

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$ZIM short squeeze potential

bullish

$ZIM has 118.6M shares outstanding. I accounted for DB's recent sales and created an 'adjusted float' of 69.7M shares. Only 3.4M shares are directly sold short. This gives an indication of MMs low interest in shorting ZIM...which makes sense because they would have to pay a very hefty dividend in March (likely north of $10/share).

They have sold so many call options that are now in-the-money or close to the money that they've grown their effective short positions to quite large numbers. Now a 20% short wouldn't necessarily cause a squeeze in-and-of itself, but for a company cashflowing like this, and with a huge dividend payment coming up in March, MMs will face a tough decision of:

  1. buying back the stock to close their short positions

  2. buying calls, creating a gamma squeeze and driving IV through the roof

  3. paying $10/share in March and $2.50/quarter thereafter

The rapid price movement the past few days has only made me more confident in this hypothesis. Please note that the dividend will probably not adjust options prices, so it may not make sense to hold options that expire in/after March. If you're going to go that far anyways, just take the shares (which could still 2-3x) and collect your divy.

read-time
1 min
75.00
Target Price
8/ 10
Confidence
2-4 Weeks
Timeframe
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Earnings Release
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SEC
Filing
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