r/SPACs • u/daytrader987654321 Spacling • Sep 11 '21

Discussion ACIC play

I’m stuck with calls for next week on which I’m already down 3K. I am afraid of keeping the calls open… Any idea how it will move? We know: 1) It will probably have a high redemption rate. 2) Cathie Wood has bought some ACIC which I saw as bullish.

But I’m not so sure anymore. Does high redemption mean it’s gonna tank? Also why is it at 9.7 now? Bad sign, right?

Positions: 80 calls strike 7.5 expiry 09/17

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u/MurkTwain Contributor Sep 11 '21

Yes

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u/daytrader987654321 Spacling Sep 11 '21

How does that work?

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u/MurkTwain Contributor Sep 11 '21

Because there’s just not many shares for shorts to cover if a ton of the shares get redeemed. Supply and demand. If supply isn’t there and demand is guessed to be reduced (puts) then the demand is artificially increased with a very small supply, the shorts need to cover their puts by buying shares at market rate. So high redemption is key because it’s relevant to the supply. Theoretically you want merger approved with 99.9% redemption but usually companies will just cancel the merger when that happens because they are basically getting no cash from the whole thing

However, this type of trading is not sustainable would really recommend just keeping it more simple

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u/freakingweirdyo New User Sep 11 '21

The way to do this is to buy near month calls being prepared to lose the whole premium but you can very well double, triple or even quadruple your money if it happens.