Squeeze: A 3 Step Process

1.) An event (large buy, catalyst, earnings), causes a can kicking of settlement as documented in various DD

2.) The options chain builds up causing liquidity to dry up and a gamma ramp to form: ITM calls cause delta hedging which dries up liquidity (from barely liquid to bone dry), and a gamma ramp forms if OTM options are built up

3.) forced settlement occurs, into a illiquid market with a gamma ramp (both caused by OPTIONS), causing additional hedging which further dries up liquidity and accelerates increasing price.

Look at the cat’s approach in May, a (likely) buy in April followed by ITM options purchases 2 weeks later, then OTM calls, all bought shortly before the forced settlement.

We’re approaching multiple likely occurrences of forced settlement in early/mid Jan. I think we see the options chain start firing off this week.

Options can force the hedging mechanism to lock the float into a settlement event. It’s always been the play.

This will be an unpopular opinion for many, and that’s ok.

My position: various 30c and 35c strikes, which lock up 100x what I could do with shares.