How RadioShack Corporation (RSH) Shorts Came Out on Top

RadioShack Corporation (RSH) is reportedly preparing for bankruptcy

by Karee Venema

Published on Jan 15, 2015 at 10:54 AM
Updated on Apr 20, 2015 at 5:32 PM

Option traders have displayed a bullish bias toward RadioShack Corporation (NYSE:RSH) in recent months, per data from the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX). Specifically, the stock's 50-day call/put volume ratio on this trio of exchanges sits at 2.32 -- in the 67th percentile of its annual range.

Speculators outside of the options arena have taken a decidedly different angle, though. In fact, more than 23% of the equity's float is sold short, and it would take nearly six sessions to cover these shorted shares, at RSH's average daily pace of trading.

Looking at the charts reveals it's short sellers who are winning the game on the struggling electronics chain. Year-over-year, the equity has lost roughly 86% of its value, and more recently, the stock has spent the past four months wallowing in penny-stock territory.

Despite a dead-cat bounce earlier this week on news of a half-billion-dollar lifeline, the equity quickly resumed its downtrend, and today, is off nearly 30% on reports the company is preparing to file for bankruptcy as early as next month. Additionally, the security tagged $0.26 out of the gate -- its lowest mark on record -- and was last seen trading at $0.29.

Daily Chart of RSH Since January 2014

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