Having watched the trade in Optionable (OTCPK:OPBL) Thursday, it appears that we have a major short squeeze brewing in the run up to earnings. There are currently over 3.5 million shares shorted, which amounts to over 20 percent of the float. Based on the 10 day average volume, that represents about 6 days to cover, so we are looking at a lot of potential buyers trying to fit through the door at the same time.
Now, I realize there has been a lot of negative press surrounding Optionable’s management structure in the past few months, but the bottom line is that operating results have continued to impress. In addition, Optionable continues to roll out new products and enter new markets, so there is nothing to make me believe that the business is about to jump the tracks. Of course, there is the issue of accounting for the NYMEX warrants that may affect the bottom line in the first quarter, but this appears to me to be far less significant than the top line growth. I continue to expect strong sequential revenue growth here, and I also expect some comments in the conference call on a potential move to the Nasdaq.
With all that said, I continue to be very bullish regarding Optionable into this week’s earnings. However, I am not going to press my bet before earnings simply because I already have a large holding in the stock and I don’t want to increase my exposure until I know the first quarter results and get to listen to the company’s conference call. With 3.5 million shares short, there isn’t much danger of missing the move, and I can afford to wait. If Optionable continues to churn out solid operating results, the stock is looking at a very violent move to the upside as buyers look to squeeze the shorts. The stock could easily surpass old highs, and that is an explosive upside situation that is worth monitoring over the next few days.
Disclosure: Author holds a position in OPBL.OB
OPBL.OB 1-yr chart