CLOV Post Earnings Bounce Play
There are many reasons to favor a CLOV long position here with earnings on March 1, 2021.
1. We have wicked off the same bottoming zone explored last November. This has many characteristics of a capitulation wick after the rapid descent following news of the DOJ investigation.
2. Short interest on this stock is quite high, although reliable up-to-date information is hard to find but nonetheless appears to be fairly high (30%), and RSI appears oversold.
3. The options market is skewed towards puts - putting the max pain point between 12.50 and 15 - more than 25% above current levels. swaggystocks.com/das...tions-max-pain/CLOVW
4. CLOV's 50% decline into earnings fits the Goldman empirical earnings system quite well which shows that stocks declining into earnings tend to pop after earnings - generating an average of 18% call option returns vs 4% for all other stocks post earnings.
5. It appears that the decline in stock price is solely due to news surrounding a DOJ investigation rather than trend changes in the business or market. The history of TSLA and FB stock suggests that legal-related FUD is often transitory, as opposed to market/moat-related FUD.
6. Finally, technical factors favor a bounce in the overall market in the coming days, and today's 8% drop in CLOV accompanied a dramatic but failed selloff in the S&P 500 (see VVIX divergence mentioned in analysis below)
Lastly, for those more concerned about the DOJ investigation than the charts or technicals, consider that the investigation began before the recent transition in the Executive Branch, and Chelsea Clinton - Vice Chair of the Clinton Foundation - serves on Clover's Board of Directors. For reasons completely outside technical analysis, it would appear that serious indictments by the DOJ are highly unlikely due to political reasons. investors.cloverheal...e/board-of-directors
Just consider this like any other transitory FUD and take advantage of buying opportunities found in the charts - as you would with Bitcoin, Tesla, or similar assets. In addition to the shares I purchased yesterday, I purchased $10 call options March 19 ($1.05) and a 12.50 LEAP (June dated).
1. We have wicked off the same bottoming zone explored last November. This has many characteristics of a capitulation wick after the rapid descent following news of the DOJ investigation.
2. Short interest on this stock is quite high, although reliable up-to-date information is hard to find but nonetheless appears to be fairly high (30%), and RSI appears oversold.
3. The options market is skewed towards puts - putting the max pain point between 12.50 and 15 - more than 25% above current levels. swaggystocks.com/das...tions-max-pain/CLOVW
4. CLOV's 50% decline into earnings fits the Goldman empirical earnings system quite well which shows that stocks declining into earnings tend to pop after earnings - generating an average of 18% call option returns vs 4% for all other stocks post earnings.
5. It appears that the decline in stock price is solely due to news surrounding a DOJ investigation rather than trend changes in the business or market. The history of TSLA and FB stock suggests that legal-related FUD is often transitory, as opposed to market/moat-related FUD.
6. Finally, technical factors favor a bounce in the overall market in the coming days, and today's 8% drop in CLOV accompanied a dramatic but failed selloff in the S&P 500 (see VVIX divergence mentioned in analysis below)
Lastly, for those more concerned about the DOJ investigation than the charts or technicals, consider that the investigation began before the recent transition in the Executive Branch, and Chelsea Clinton - Vice Chair of the Clinton Foundation - serves on Clover's Board of Directors. For reasons completely outside technical analysis, it would appear that serious indictments by the DOJ are highly unlikely due to political reasons. investors.cloverheal...e/board-of-directors
Just consider this like any other transitory FUD and take advantage of buying opportunities found in the charts - as you would with Bitcoin, Tesla, or similar assets. In addition to the shares I purchased yesterday, I purchased $10 call options March 19 ($1.05) and a 12.50 LEAP (June dated).
Kommentar:
Fail!
