I know many of us trade stocks using insider share unlocking info. E.g. SNOW :)
In my DKNG brokerage news feed, I saw a recap about the impact share unlocking had on that stock starting early Oct.
Well it’s nothing new, it’s still nice quick read especially for newer investors. I did follow the share lock info for Oct & was lucky enough to make some nice profit buying, selling , rinse, & repeat. Basically traded my position 3x. Have the same amount of shares now that I started with on Oct. 1.
Now the option strategy would have been more profitable but even as a seasoned investor, I didn’t go that route. Just used stop sell limits instead. Next time & w/ like SNOW (thanks 7Sins for the heads up), I will continue going to options route. PLTR Is the tea interesting one now with 80% being unlocked 3 days after the next earnings call announcement but I wonder if we will be seeing as much selling in this stock as the others. PLTR has their little cult following & unlock some IPOs & Direct Listings, they didn’t go public with only 10% of total shares. PLTR went with 20%.
“Benzinga's PreMarket Prep airs every morning from 8-9 a.m. ET. During that fast-paced, highly informative hour, traders and investors tune in to get the major news of the day, the catalysts behind those moves and the corresponding price action for the upcoming session.
On any given day, the show will cover at least 20 stocks determined by co-hosts Joel Elconin and Dennis Dick along with producer Spencer Israel.
There are many different catalysts that can move issues higher or lower. Some are obvious like earnings reports and rating changes, but some others are not as widely followed. For example, price action in an issue ahead of the day of a lock-up expiration.
With that being said. DraftKings (NASDAQ: DKNG) is the PreMarket Prep Stock Of The Day.
What Does A Lock-Up Expiration Mean? An IPO lock-up period is the term used to define a period of time after a company has gone public when major shareholders are prohibited from selling their shares. Lock-up periods usually last between 90 to 180 days and may vary for different types of shareholders. Once the lock-up period ends, most trading restrictions are removed.
Typical Price Action Ahead Of Lock-Up Date: Some savvy investors track the lock-up expiration dates for all of the current IPOs and may take a short position ahead of the actual date in anticipation of large blocks of stock being for sale. Of course, there is no guarantee that any insider selling at all, but that does not necessarily delegitimize the point of the essence of the strategy.
Another consideration that the preemptive sellers take into account is the previous price action ahead of the actual date. For example, if an issue has been in a prolonged downtrend, it is less likely that insiders will want to unload shares at a discount to its former price.
Recent Price Action: Since bottoming on Oct. 30, 2020, at $34.90, DraftKings embarked on a $20 rally and finally peaked Dec. 18 at $55.98. After a few days of consolidation in the $52-$54 area, it had a significant down day on Dec. 28, falling from $52.11 to $48.98 on no news.
It's impossible to determine if the retreat was just some good ole profit-taking or preemptive sellers ahead shorting the issue ahead of the lock-up expiration date.
Continuation Move Lower Into Expiration: Interestingly, the issue drifted lower right into Tuesday's lock-up expiration. In fact, the issue reached its lowest level since its late December peak.
After a lower open, it just breached Monday's low ($44.50) hitting $44.10 and sharply reversed course and ended the session at higher by nearly $3 at $47.50 and tacked on another $4 earlier today when it peaked at $51.80 and has sharply reversed course. As of 1 p.m. ET, it has retreated to the $49 area.
Therefore, late sellers of the strategy that did cover early in Tuesday's session found themselves scrambling to cover in a rising market.
PreMarket Prep Take On This Strategy: The producer of the show explained the scenario for DraftKings and cautioned that 'there is no guarantee that there is going to be large sellers on the actual date."
Co-host Dennis Dick discussed the 'anticipatory selling strategy."
"Sellers that were waiting for a lot of follow-through beyond Monday's low ($44,50) got the rugged pulled out from under them as the issue rallied for the remainder of the session," he said.”
Skip to 31:37
https://youtu.be/BiFxOTFcYHQ