Unusal Options Flow for Smile Direct Club (SDC); Social Chatter Spikes, Reddit Wants More

Unusal Options Flow for Smile Direct Club (SDC); Social Chatter Spikes, Reddit Wants More

Last week, Smile Direct Club (SDC) made a run for gold amidst online chatter of yet another short squeeze play. Last Monday, September 13 2021, SDC started out the week’s trading in the $5.25 price range; but as Reddit clamor continued, as did the rising share price. By Friday September 17 2021, SDC had risen as high as $7.15 before settling in the high $6s, and closing out the week at $6.70.  Currently in Pre-Market trading, SDC is up 5.22% to $7.07.

This past weekend, Reddit continued to buzz with energy for Smile Direct Club. In fact, over the last 48 hours, SDC has become the most discussed ticker on Reddit, second only to SPY.

SDC most discussed after SPY

Reddit posts of “YOLO” and “Why I’m bullish on SDC” flowed in across multiple subreddits.After such a heftfy run (+27.62% on the week), one may expect a cooldown period. Redditors from the r/WallStreetBets and r/ShortSqueeze subreddits have something else in mind.

In the imagine above, taken from u/Araphoren’s post on r/WallStreetBets titled “Dehedging the (tiny) float”, the author outlines why they believe SDC has much more upside. In an explanation that warrants attention, u/Araphoren describes a 5-to-1 ratio of shorted shares vs. traded float (49 million short, 10 million float). Due to this, there are strong hopes that SDC will continue to push up; and u/Araphoren appears to have put their money where their mouth is.

Comparatively, the Unusual Whales Flow last week seemed to show a similar narrative. SDC ask-side orders caught on Wednesday, September 15 (pictured above), above $10k in premium displayed a mostly bullish sentiment. By Friday, these expectations appeared to continue, except with much larger orders at play, rangine from $100k in premium to $450k. One large in-the-money put order came in, which could be a potential hedge, and was marked as part of a multi-leg order.

Are the Reddit chatter, data therein, and Options Flow enough to solidify an imminent short squeeze on SDC? We leave that up to you lovely whales and apes of the retail trading community. Where do you think SDC will end up?