AMD Short Interest Has Grown by 234% in Nine Months Reveals Data(wccftech.com)
wccftech.com
AMD Short Interest Has Grown by 234% in Nine Months Reveals Data
https://wccftech.com/amd-short-interest-has-grown-by-234-in-nine-months-reveals-data/
45 comments
For someone who is at the beginner level of financial trading knowledge, what does it mean for a particular stock to have high short interest? Does that mean there are so many people who are betting against AMD of late (meaning, that the market thinks the company is going to underperform in the near future)? Thanks in advance for your explanation!
A stock can be sold short, meaning you receive cash from your broker now, and you promise to give them the share at some point in the future. This is pretty much a negative view on the stock because you’re hoping you can sell to open at $120 and buy to close at $100 and keep the difference for yourself.
Short interest is the number of shares in all the short positions that have been opened but not closed yet, and it is a bearish indicator. It doesn’t necessarily mean that MANY people think the market is going to underperform though, it could actually be just a handful of hedge funds with massive positions.
It also doesn’t have too much to do with the long term performance of a company. It’s probably better to interpret it as a view on the share price rather than on the long-term performance of the company. (interpreting any financial ratio or metric in isolation is tough)
Another interesting implication of high short interest is this idea of “Days To Cover” which is short interest / average daily volume.
In situations where days to cover is very high, shorts can find themselves unable to close their positions, even though the market is moving away from them (aka up). This leads to a short squeeze - famously with GME this year.
Short interest is the number of shares in all the short positions that have been opened but not closed yet, and it is a bearish indicator. It doesn’t necessarily mean that MANY people think the market is going to underperform though, it could actually be just a handful of hedge funds with massive positions.
It also doesn’t have too much to do with the long term performance of a company. It’s probably better to interpret it as a view on the share price rather than on the long-term performance of the company. (interpreting any financial ratio or metric in isolation is tough)
Another interesting implication of high short interest is this idea of “Days To Cover” which is short interest / average daily volume.
In situations where days to cover is very high, shorts can find themselves unable to close their positions, even though the market is moving away from them (aka up). This leads to a short squeeze - famously with GME this year.
> A stock can be sold short, meaning you receive cash from your broker now, and you promise to give them the share at some point in the future.
Just like OP, I'm also at the beginner level at financial trading, but I think you're explaining either options or margin with your first sentence, right? With shorting you borrow a stock (where you pay interest on it) and immediately sell it. When the price of stock falls, you then buy it and return it. Is this correct?
Just like OP, I'm also at the beginner level at financial trading, but I think you're explaining either options or margin with your first sentence, right? With shorting you borrow a stock (where you pay interest on it) and immediately sell it. When the price of stock falls, you then buy it and return it. Is this correct?
So your parent implied borrowing and selling the stock immediately to "receive cash from your broker now" and by doing so they are required to return the stock (unless the company goes bankrupt). In this way, you are both correct about what shorting a stock is.
However, options are NOT like this. With options, the write side could receive a premium on their side of a contract for guaranteeing either to sell the shares at a specified price (a write-call) or guaranteeing to buy the shares at a specified price (a write-put). In either case, the person buying that contract can choose to either execute that contract or let it expire, meaning it could be the case that the writer (who receives a premium) may never have to act further (because the contract buyer never executes it, so the writer just pockets the full premium).
However, options are NOT like this. With options, the write side could receive a premium on their side of a contract for guaranteeing either to sell the shares at a specified price (a write-call) or guaranteeing to buy the shares at a specified price (a write-put). In either case, the person buying that contract can choose to either execute that contract or let it expire, meaning it could be the case that the writer (who receives a premium) may never have to act further (because the contract buyer never executes it, so the writer just pockets the full premium).
I'm surprised some wealthy cryptonerd didn't tickle this stock GME style.
My guess it's a combination of the capital requirements being insane for a single person to pull off, and the possibility of the SEC going after them for price manipulation.
How are limits defined on what one entity can buy or sell at once ?
IANAL, but afaik prosecution is based on intent rather than buy/sell volume. There isn't a prescribed dollar/percentage amount that separates legal/illegal behavior. See the indictment for Philip Falcone, who was prosecuted for market manipulation: https://www.sec.gov/litigation/complaints/2012/comp-pr2012-1...
“Float” is the number of shares that a company has sold and are available to trade.
“Short Interest” is the number of shares that have been borrowed and sold into the market.
So having high short interest just means one or more people are betting the share price of AMD will go down so that they can profit.
Buying a stock (aka a long position) has a finite level of risk. If you buy 1 share for $100 your risk is limited to losing $100.
Selling a stock short (aka a short position) has infinite risk. For example, someone that sold 1 share of Amazon short in November of 1997 for $5 has lost over $10,000 factoring in Amazon’s current stock price and the splits the stock has had over the years.
When short interest is high the danger of a short squeeze is higher than usual. Picture what would happen if AMD stock price doubled. As everyone is buying the stock, short sellers would also be forced to buy the stock either to stop rampant losses or due to a margin call. This can make the price of a stock with high short interest rise dramatically.
Good article on historic short squeezes:
https://www.ig.com/en/trading-strategies/what-were-the-bigge...
“Short Interest” is the number of shares that have been borrowed and sold into the market.
So having high short interest just means one or more people are betting the share price of AMD will go down so that they can profit.
Buying a stock (aka a long position) has a finite level of risk. If you buy 1 share for $100 your risk is limited to losing $100.
Selling a stock short (aka a short position) has infinite risk. For example, someone that sold 1 share of Amazon short in November of 1997 for $5 has lost over $10,000 factoring in Amazon’s current stock price and the splits the stock has had over the years.
When short interest is high the danger of a short squeeze is higher than usual. Picture what would happen if AMD stock price doubled. As everyone is buying the stock, short sellers would also be forced to buy the stock either to stop rampant losses or due to a margin call. This can make the price of a stock with high short interest rise dramatically.
Good article on historic short squeezes:
https://www.ig.com/en/trading-strategies/what-were-the-bigge...
Short interest refers to number of shares (vs number of people), but you've got the idea.
I hesitate to write a lot because there's always 'well, actually' clauses that sends you down a rabbit hole(or off a cliff), but simplified it's people selling shares they don't own, with an agreement to buy them later. The hope for the short seller is that the price will be cheaper in the future.
I hesitate to write a lot because there's always 'well, actually' clauses that sends you down a rabbit hole(or off a cliff), but simplified it's people selling shares they don't own, with an agreement to buy them later. The hope for the short seller is that the price will be cheaper in the future.
No, there's an equal number of people* on the opposite side of those bets. If there was an imbalance between people thinking the stock is worth more than the current price and people believing the stock is worth less, then that would cause the price to move until it balanced out.
*Technically an equal number of dollars
*Technically an equal number of dollars
I think it depends on the structure of the deals. I can imagine a structure where shorts do signal an imbalance:
A lends a share from B and promises to give it back in a year.
A pays B a lending fee of $10.
A sells the share to C for $100.
In your example the bet is between A and B. If the price in a year is say $80 then yes A makes a $10 profit. But in that situation B loses the same amount: they started with $100 of stock, and a year later ended with $10 cash and $80 of stock. Conversely, B makes a profit if the stock goes down by anything less than 10%. This is a really good deal for B!
In your example the bet is between A and B
So we have two participants:
A thinks the price will go down.
B thinks the price will stay flat.
The bet is symmetric, but not around the current price:
A thinks the price will be under $90 in one year
B thinks the price will be over $90 in one year
that would be a signal
Wasn’t that the problem with GameStop, the short sells had shorted more stocks than was actually in circulation?
The problem with GameStop was that many redditors thought there was more shorts than total stock available and that this would make it impossible for all of the short sellers to cover their position. In reality, a single unit of stock can be borrowed and sold short multiple times without really causing any problems
That did happen but the latest SEC report showed that it didn’t really have much impact on the price
Identity A borrows a share from B. A sells the share to C in hopes of buying it back later at a lower price. C decides to loan their share to D.
A: has one share loaned out
B: owes A one share
C: has one share loaned out
D: owes C one share.
Two shorted shares from one share
A: has one share loaned out
B: owes A one share
C: has one share loaned out
D: owes C one share.
Two shorted shares from one share
The general semiconductor shortage is likely to ripple upward to AMD even if AMD can produce everything without interruption.
Processors rely on a motherboard. Those motherboards have a lot of popcorn semiconductors on them. A shortage in any one of those cheap chips means no motherboard sale which means no processor sale.
Combine this with more people going back to in person (so less online) and it's likely that AMD is going to have a bit of volume hit.
Processors rely on a motherboard. Those motherboards have a lot of popcorn semiconductors on them. A shortage in any one of those cheap chips means no motherboard sale which means no processor sale.
Combine this with more people going back to in person (so less online) and it's likely that AMD is going to have a bit of volume hit.
This is old news from August
Short interest has declined significantly since August.
https://www.marketbeat.com/stocks/NASDAQ/AMD/short-interest/
https://www.marketbeat.com/stocks/NASDAQ/AMD/short-interest/
Things have changed since the articule was published. The trend goes downwards:
https://www.nasdaq.com/market-activity/stocks/amd/short-inte...
https://www.nasdaq.com/market-activity/stocks/amd/short-inte...
Does this have anything to do with GME + Robinhood + WSB saga?
https://hothardware.com/news/amd-robinhood-gamestop-gme-shor...
https://hothardware.com/news/amd-robinhood-gamestop-gme-shor...
Amd is the whipping boy of wall street for the last two decades with high levels of shorting along the way. I wonder how many shortsellers they've destroyed over the years
I don’t like clickbait titles like this.
> short interest has grown 234%
If the original interest was 1% of the float and now it’s 234% grown, it is still an insignificant number. You’ll always see about 5% short interest in the healthiest of the companies, it’s when it starts going nuts like amc when you pay attention.
> short interest has grown 234%
If the original interest was 1% of the float and now it’s 234% grown, it is still an insignificant number. You’ll always see about 5% short interest in the healthiest of the companies, it’s when it starts going nuts like amc when you pay attention.
I once made a 20x return (I bought Cardano for fun in 2018).
On $33. That's still $666. But if it was $1000, it'd have been $20000.
So there's that.
On $33. That's still $666. But if it was $1000, it'd have been $20000.
So there's that.
What does this have to do with the current thread?
It points out that percentage of growth is a valid and useful metric depending on the situation. As root comment noted, it doesn't matter much if it was very small, but that's not always the case. Additionally, absolute numbers aren't always useful for similar reasons, but affecting the opposite spectrum. A headline might note something has risen by billions, but if that amounts to growing by 5%, is that really any better of a way to represent things than growing a large percentage on a small amount?
This is the point indeed. I once doubled my revenue one day, it went from $2 to $4. You think I joke but I was a kid back then. As a kid it was actually quite meaningful to double that particular amount.
Now I wouldn't care about having a 100% return on $2. Perhaps if there's a principle behind it that's interesting I might care, but I wouldn't care much about the money made.
But having 100% return on $2 million. Well, let's just say I'd care.
Now I wouldn't care about having a 100% return on $2. Perhaps if there's a principle behind it that's interesting I might care, but I wouldn't care much about the money made.
But having 100% return on $2 million. Well, let's just say I'd care.
Is it too late to buy more AMD stock? Got mine back at $11 and looking at what it is now, I can't help but want to kick own ass my for being a pussy and only dropping a few grand.
In any case, thank you Mrs Su
In any case, thank you Mrs Su
Purely technical speaking & NFA
Right now? Yes, too late. Price at the beginning of October was 99.51 USD, now it's 119.83 USD. 20% increase since the 99.51 re-test.
But you could buy some put options, since we reached the same level of resistance as in August. Imo it's not a bad idea to secure your position against a pullback, especially since the earnings are announced next week!
Right now? Yes, too late. Price at the beginning of October was 99.51 USD, now it's 119.83 USD. 20% increase since the 99.51 re-test.
But you could buy some put options, since we reached the same level of resistance as in August. Imo it's not a bad idea to secure your position against a pullback, especially since the earnings are announced next week!
Price was about 90 USD this time last year. Not a huge gain in 12 months. I really don't get what prompts AMDs highs and lows. I am sure it was like 107 just a couple of weeks ago and they haven't had any major new announcements yet. Just reaffirmed what was already known, no?
Any links you could share? I've been trying to avoid seeking alpha. Is that a mistake?
Any links you could share? I've been trying to avoid seeking alpha. Is that a mistake?
And then you have stocks like tesla, where we left reality..
Buy XLNX if you decide to buy. Once the merger goes through XLNX shares will be converted to 1.723 AMD shares.
I feel the same with CloudFlare ($NET). But be happy you got in on at least something.
I wanted to buy at $2 but got caught in a series of personal issues and didn't have the time. There went my only chance of ever making any serious money. I had a feeling things were going well, just not this well.
After all AMD went to 30+, then dropped to 18 and stayed there for a while. As I said above, I really don't get it. Almost blind luck I made any money at all.
After all AMD went to 30+, then dropped to 18 and stayed there for a while. As I said above, I really don't get it. Almost blind luck I made any money at all.
I did buy at 2$, but only dared to buy for like a thousand. Lucky, but still oh well. It did help to undo a could of bad trades.
The short interest is mostly a merger arbitrage play—AMD is in the process of acquiring Xilinx.
When a merger happens the acquirer falls in value and the target rises in value (in general).
I’m long AMD.
When a merger happens the acquirer falls in value and the target rises in value (in general).
I’m long AMD.
a war over Taiwan with TSMC right in the middle would certainly cause some issues for AMD.
I know you meant that casually, but I think it could be an American powerplay to keep China in check. If historical American influence are any indicator, they are not going to sit idly by and watch China achieve great feats and eat away American domination. They are probably strategising right now to stifle this growth. If so, TSMC could become a collateral. Intel would become the American reliable silicon provider for the western world.
I feel like a conspiracy theorist saying what I said, but a part of me seriously believes USA is capable of doing and thinking exactly like this.
I feel like a conspiracy theorist saying what I said, but a part of me seriously believes USA is capable of doing and thinking exactly like this.
A war over Taiwan would have global economic consequences that made whatever AMD's stock price did the most minor of footnotes. The amount of trade that goes through that area of the Pacific is staggering.