Workhorse Stock Attempts to Recover From SEC Probe

The stock snapped a four-day win streak yesterday

Deputy Editor
Sep 2, 2021 at 9:24 AM
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Workhorse Group Inc (NASDAQ:WKHS) is up 0.8% at $9.21 this morning, brushing off yesterday's news that the U.S. Securities and Exchange Commission (SEC) has launched a probe into the company, though the reason for the investigation is unclear.

The security suffered a 6.8% drop during yesterday's session, when the news was initially released, snapping a four-day win streak, with direct pressure at the 40-day moving average capping any intraday upside. The stock is a Reddit favorite, turning volatile in February, and again in early June. This speculative trading was short-lived, however, and the shares have made their way back toward their one-year lows touched in mid-May. WKHS is down 53.8% year-to-date. 

A short-term bounce may have already been in the cards for WKHS. This is per the stock's 14-day Relative Strength index (RSI) of 34, which sits right on the cusp of "oversold" territory. 

Still, options traders have been quite bullish. At the International Securities Exchange (ISE), Cboe Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX), WKHS sports a 50-day call/put volume ratio of 4.90, which stands higher than 69% of readings from the past 12 months. This implies long calls are being picked up at a quicker-than-usual clip. 

Echoing this, the equity's Schaeffer's put/call open interest ratio (SOIR) of 0.43 stands higher than just 3% of annual readings, meaning short-term options traders have rarely been more call-biased. 

The equity is still heavily shorted, despite a slight drop in short interest during the last two reporting periods. The 40.53 shares sold short make up 35.7% of WKHS' available float, and would take over two days to buy back at its average daily pace of trading. 

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