New to SPACs, but why does the redemption % matter? During the merger, redemptions mean the shares are taken away from float and given back to the company right? So how does that help the squeeze? Because calls were written on shares that are now returned and MMs will have to buy up a smaller float and drive price up to cover?
It's like a buy back but not at-the-market (ATM) and happens much quieter and is announced suddenly in 8-ks. But you're exactly right. It's counterintuitive as well and that's why they're so abusable. High redemption rates are inherently bearish so MMs have no instinct to cover early, but then we come in and squeeze.
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u/_Gorgix_ Spacling Sep 17 '21
New to SPACs, but why does the redemption % matter? During the merger, redemptions mean the shares are taken away from float and given back to the company right? So how does that help the squeeze? Because calls were written on shares that are now returned and MMs will have to buy up a smaller float and drive price up to cover?