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I’m watching something unfold right now that I haven’t seen happen this early in years…
Traders are abandoning the boring index plays and aggressively hunting stocks with ridiculous short interest — and I mean the kind of short interest that makes my eyes light up. We’re talking anything over 5% short float (especially in a really big stock), but the real money’s in names pushing 20%, 25% and even higher.
Why? Because instead of chasing a potential 5-10% move in index ETFs like SPY, these guys are bottom-fishing individual names that could rip 20% or more. And here’s the kicker — this playbook usually happens in November or December, but it feels like things are firing off even earlier this year.
I think the Fed’s interest rate cuts might’ve accelerated the whole thing. Whatever the reason, the opportunity is here now — and you need to know how to spot it.
How to Find These Squeeze Candidates
First off, you don’t need expensive software to hunt these down. I use Finviz’s free screener to filter for high-short-interest stocks, and it gets the job done.
What I’m looking for are fallen angels — stocks that used to be institutional darlings but got absolutely destroyed. The kind of names that funds want to squeeze into year-end because they’re sitting on huge short positions and one catalyst can blow the lid off.
Let me give you some real examples…
QuantumScape (QS) is sitting at around 13% short interest and popped 14% on joint development news. That’s the kind of setup I’m talking about. One piece of news, and the shorts scramble.
Opendoor Technologies (OPEN) is at 25% short float — and that’s why you see those insane moves. High short float equals high volatility, and that’s where the fast money lives. You’re looking at potential 3-5% daily swings in the underlying, and when the real squeeze happens, look out…
Then there’s Applied Optoelectronics (AAOI) at 22% short interest — a stock that used to trade at $103 that institutions are now circling. These are the beaten-down names that could have serious snapback potential.
Why Year-End Bottom-Fishing Works
Here’s the thing — funds are out there bottom-fishing the worst-performing stocks to run them into year-end. It’s a classic playbook. They pick the names that had a massive fall from grace and try to manufacture a rally.
You’re seeing it play out in real-time with some of those AI-related small caps. The pattern’s clear: Pick a heavily shorted, beaten-down stock, start accumulating, and let the short squeeze mechanics do the rest.
The beauty of this setup is that while everyone’s debating whether the indexes will grind higher, you’re sitting on individual names that can move 20%+ in a matter of days or weeks.
That’s the kind of asymmetry I’m always hunting for.
If you’re not screening for high short interest right now, you’re missing one of the best setups of the quarter. Don’t overthink it — I’m finding the stocks with big short positions, looking for fallen angels with potential catalysts, and positioning myself on the cheap before the squeeze starts!
Order Flow:
This is for informational and educational purposes only. These are not official alerts issued by Lance, but rather some interesting orders picked by the team at Lance Ippolito Trading.
When you look at these plays, always take the market maker move into consideration.
You can be right on the direction but still lose money if the stock doesn’t move enough. That’s where the market maker move comes in clutch.
With puts, they’re often downside hedges in case a stock tanks, especially around earnings. The further out of the money they are, the more likely they are to be hedges.
Also be sure and check when the company’s earnings date is because many of the plays we post here are centered around earnings!
If a stock is really expensive, consider a spread to lower the cost.
And finally, always remember the golden rule when it comes to buying calls: Buy dips, sell rips — and don’t chase!
If a stock’s moved a ton already today, maybe wait for a pullback.
There is inherent risk in trading. Trade at your own risk.
Note: If no date is listed after the month, it’s the monthly expiration (third Friday).
The team at Lance Ippolito Trading
Lance doesn’t want the CCP spying on him, so you’ll never find him on TikTok. Same goes for other social media sites, which are filled with impersonators, scammers and crypto bros.
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*This is for informational and educational purposes only. There is inherent risk in trading, so trade at your own risk.
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