Why Clover Health Could Be Setting Up To Pummel Shorts Again

Clover Health Investments, Corp’s CLOV stock attempted to bust through an upper resistance level at the $9.09 mark but rejected the level and wicked from it.

The stock has attempted to break above the level on three separate occasions over the past eight trading days but failed.

Clover Health had above average volume Thursday, however, indicating interest has returned to the stock. By the afternoon, 22.11 million shares of Clover Health had traded hands compared to the average 10-day trading volume of 18.85 million.

In June, rising volume in Clover Health preceded a massive short squeeze that propelled the stock up 221% to an all-time high of $28.85 over the course of just three trading days.

The stock then plummeted almost 75% lower, where it found an Aug. 19 bottom at $7.41. Clover Health has since traded sideways but could be setting up for another epic squeeze.

Clover Health fits the bill due to its underlying statistics:

• Small Float: Clover Health has a relatively small float of 198.66 million shares.
• High Ownership: 74.19% of Clover Health’s float is held by insiders and institutions, with insiders owning 15.43% of available shares and institutions owning 58.76%.
• Short Interest: 30.27 million, which means 15.23% of Clover Health total float is held short. This number has increased from 28.61 million in July.

On Thursday, options traders piled in and purchased $315,393 in bullish Clover Health call contracts. Most of the traders chose a strike price of $10 and a Jan. 21 expiry, but one trader paid $25,393 for 379 calls with a whopping $25 strike expiring Feb. 18.

See Also: How to Buy Clover Health Stock

Why It’s Important: When a sweep order occurs, it indicates the trader wanted to get into a position quickly and is anticipating an imminent large move in stock price. A sweeper pays market price for the call or put option instead of placing a bid, which sweeps the order book of multiple exchanges to fill the order immediately.

These types of option orders are usually made by institutions, and retail investors can find watching for sweepers useful because it indicates “smart money” has entered into a position.

The CLOV Trades: Below is a look at the notable options alerts, courtesy of Benzinga Pro:

• At 10:05 a.m., a trader executed a call sweep near the ask of 200 Clover Health options with a strike price of $11 expiring on Jan. 21, 2022. The trade represented a $30,000 bullish bet for which the trader paid $1.50 per option contract.
• At 12:15 p.m., a trader executed a call sweep near the ask of 250 Clover Health options with a strike price of $10 expiring on Jan. 21, 2022. The trade represented a $45,750 bullish bet for which the trader paid $1.83 per option contract.
• At 12:15 p.m., a trader executed a call sweep near the ask of 250 Clover Health options with a strike price of $10 expiring on Jan. 21, 2022. The trade represented a $45,750 bullish bet for which the trader paid $1.83 per option contract.
• At 12:15 p.m., a trader executed a call sweep near the ask of 250 Clover Health options with a strike price of $10 expiring on Jan. 21, 2022. The trade represented a $45,750 bullish bet for which the trader paid $1.83 per option contract.
• At 12:15 p.m., a trader executed a call sweep near the ask of 250 Clover Health options with a strike price of $10 expiring on Jan. 21, 2022. The trade represented a $45,750 bullish bet for which the trader paid $1.83 per option contract.
• At 12:17 p.m., a trader executed a call sweep near the ask of 250 Clover Health options with a strike price of $10 expiring on Jan. 21, 2022. The trade represented a $47,000 bullish bet for which the trader paid $1.88 per option contract.
• At 12:55 p.m., a trader executed a call sweep near the ask of 1,000 Clover Health options with a strike price of $10 expiring on Sept. 10. The trade represented a $30,000 bullish bet for which the trader paid 30 cents per option contract.
• At 1:03 p.m., a trader executed a call sweep near the ask of 379 Clover Health options with a strike price of $25 expiring on Feb. 18, 2022. The trade represented a $25,393 bullish bet for which the trader paid 67 cents per option contract.

CLOV Price Action: Shares of Clover Health ended Thursday's session 4.72% higher at $8.87.