RedBox Stock Extends Rally, Options Traders Respond

view original post

The security looks ripe for a short squeeze

RedBox Entertainment Inc (NASDAQ:RDBX) is bucking the broad-market selloff today, up 24.4% at $16.42 at last glance, as the short squeeze candidate extends its recent rally and trends on Stocktwits. Up 144.8% in the last week, RDBX is currently trading at its highest level since November. 

Short interest represents 38.6% of the stock’s available float, after jumping 62.2% in the last two reporting periods. However, RDBX’s 14-Day Relative Strength Index (RSI) of 82.1 stands in “oversold” territory — a factor that is in favor of the security’s looming correction. 

Options traders don’t appear to be worried about the stock running out of steam just yet, with 67,000 calls exchanged so far, in comparison to 15,000 puts. This has overall options volume running at seven times the intraday average. The June 28 call is the most popular, followed by the 18 call in the same monthly series, with new positions being opened at the former.

Meanwhile, analysts lean bearish. Of the four in coverage, three carry a “hold” or worse rating. In addition, the 12-month consensus price target of $2.17 is an 87.3% discount to current levels.