Clover Health's Stock Busts Through Resistance

Clover Health Investments Corp. CLOV shot up over 21% Wednesday on momentum before consolidating. The stock has been heavily shorted recently and plummeted over 63% from the all-time high of $17.46 it made on Jan. 4.

With earnings coming up May 17 before the market opens, options and technical traders think Clover Health’s stock is set for an even larger rebound.

On Wednesday a number of options traders bet over $592,065 Clover Health’s stock is going higher and the bullish volume that has recently entered the stock predicts the same.

See Also: BofA Remains Bullish On Clover Health With Improving Visibility Into Growth

The Clover Health Chart: Clover Health’s stock found a bottom on March 5 and has rebounded 66%. On Wednesday Clover Health busted through resistance at $9.94 and almost reached its next resistance level at $11.52 before pulling back.

Clover Health is trading above both the eight-day exponential moving average (EMA) and the 21-day EMA, with the 8-day EMA trending above the 21-day EMA, both of which are bullish.

On April 16, 17 and 28, Clover Health printed large bullish volume candles. Since volume usually precedes price action, this indicates the share price of the stock is headed higher.

Bulls want to see Clover Health’s stock jump over resistance near the $11.50 level, which would bring it closer to the gap at $13.82. Since gaps fill 90% of the time it's likely the stock will eventually trade back at that level.

Bears want to see Clover Health’s stock fall back under resistance near the $10 level.

The Clover Health Option Trades: Below is a look at the notable option alerts, courtesy of Benzinga Pro:

• At 9:39 a.m., a trader executed a call sweep, near the ask, of 262 Clover Health options with a $9 strike price expiring on May 21. The trade represented a $70,740 bullish bet for which the trader paid $2.70 per option contract.
• At 9:41 a.m., a trader executed a call sweep, near the ask, of 276 Clover Health options with a $10 strike price expiring on May 21. The trade represented a $35,880 bullish bet for which the trader paid $1.30 per option contract.
• At 9:56 a.m., a trader executed a call sweep, near the ask, of 200 Clover Health options with a $12 strike price expiring on Jan. 21. The trade represented a $50,000 bullish bet for which the trader paid $2.50 per option contract.
• At 10:40 a.m., a trader executed a call sweep, near the ask, of 468 Clover Health options with a $10 strike price expiring on June 18. The trade represented a $88,920 bullish bet for which the trader paid $1.90 per option contract.
• At 10:42 a.m., a trader executed a call sweep, near the ask, of 409 Clover Health options with a $10 strike price expiring on May 21. The trade represented a $61,350 bullish bet for which the trader paid $1.50 per option contract.
• At 11:00 a.m., a trader executed a call sweep, near the ask, of 1000 Clover Health options with a $20 strike price expiring on June 18. The trade represented a $45,000 bullish bet for which the trader paid 45 cents per option contract.
• At 11:18 a.m., a trader executed a call sweep, near the ask, of 200 Clover Health options with a $12 strike price expiring on Jan. 21. The trade represented a $51,000 bullish bet for which the trader paid $2.55 per option contract.
• At 11:41 a.m., a trader executed a call sweep, near the ask, of 255 Clover Health options with a $10 strike price expiring on Aug. 20. The trade represented a $72,675 bullish bet for which the trader paid $2.85 per option contract.
• At 11.50 a.m., a trader executed a call sweep, near the ask, of 202 Clover Health options with a $9 strike price expiring on May 21. The trade represented a $50,500 bullish bet for which the trader paid $2.50 per option contract.
• At 12:03 p.m., a trader executed a call sweep, near the ask, of 330 Clover Health options with a $12.50 strike price expiring on Aug. 20. The trade represented a $66,000 bullish bet for which the trader paid $2 per option contract.

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 option instead of placing a bid, which sweeps the order book of multiple exchanges to fill the order immediately.

These types of call 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.

CLOV Price Action: Shares of Clover Health closed up 13.6% at $10.50.