Yo, Pit Crazies,

As most of my students know, I am a big believer in reading the screens.

The good news is, learning to read an option screen is a skill anyone can master if they want to learn.

Below in a screenshot of Rumble Inc. (Ticker: RUM).

The RUM markets are saying a lot.

How to Tell If A Stock Hard-to-Borrow

It is just some simple arithmetic.

Look at the RUM 13 strike …

Take the call bid of $1 and subtract the put offer of $5.30. That creates a $4.30 credit.

Take that credit and subtract it from the strike. That would be $8.70.

The long call and short put is called a combination or synthetic stock.  It acts just like the stock but does not collect a dividend.

If an investor wanted to buy RUM, they could just use the options, take delivery in December and the price would be $8.70 with RUM currently trading $13.06.

When the put values are so high relative to the calls and strikes, that is a signal from the market that the stock is hard to borrow.

There is a lot of short interest now in RUM after Musk took over Twitter. The thinking might be there will be less interest in a more “open” platform.

Usually stocks with this kind of credit for the combination fly from a short squeeze. They usually squeeze up.

One to watch!

The Rundown

OP Mentoring

I closed an Alphabet Inc (Ticker: GOOGL) put for a 30% return Friday and am now riding long call butterflies back up.

Nitro Trader

Mark and I closed some CVS Inc. (Ticker: CVS) call butterflies for a 39% gain. CVS is looking strong lately.

Power Income Trader

Bill is still at it with a nice 39% gain in US Gold Trust ETF (Ticker: GLD) call spreads. Join him for the next quarter.

To Your Trading Success,

AG