Is Evofem Biosciences (EVFM) Stock the Next Big Squeeze?

  • Fintel has flagged Evofem Biosciences (EVFM) stock as a top gamma squeeze candidate.
  • One popular Twitter (TWTR) influencer highlighted the stock's Fintel ranking yesterday.
  • EVFM stock has been rising steadily since markets opened today.
Pipette adding fluid to one of several test tubes; biotech
Source: motorolka / Shutterstock.com

Evofem Biosciences (NASDAQ:EVFM) stock only recently became well-known on Wall Street. After the U.S. Supreme Court overturned Roe vs. Wade, the rush on contraceptives propelled the microcap biotech stock to new highs. But just over a week later, EVFM stock is making headlines for different reasons. Some experts predict it will be among the market’s next gamma squeezes.

What exactly is a gamma squeeze? According to short analysis platform Fintel, “a gamma squeeze is a specific event that happens when the price of a stock climbs suddenly due to actions in the options market.”

Fintel ranks EVFM stock at the top of its gamma squeeze leaderboard for this week. The company boasts a high gamma squeeze score of 99.50. Its net call open interest (OI) percentage of float is also 37.98%. That’s substantially higher than the second stock on the list, Revlon (NYSE:REV), at 23.75%. While Revlon and third-place stock Clovis Oncology (NASDAQ:CLVS) have advanced steadily in the rankings since last week, EVFM stock is new to the leaderboard.

Is EVFM Stock in for a Gamma Squeeze?

Since coming into the spotlight in late June, EVFM stock has been volatile but remained mostly in the green. Despite dipping in pre-market trading this morning, shares also started surging after the markets opened today. As of this writing, EVFM is up more than 6%.

EVFM stock also has another catalyst that could help it rise. Yesterday, popular Twitter (NYSE:TWTR) influencer Will Meade shared a screenshot of Fintel’s gamma squeeze rankings. Since then, the stock has been trending on the platform as many investors call for bullish plays.

Smartasset explains that gamma squeezes are most likely “when there’s widespread buying activity of short-dated call options for a particular stock.” That description definitely fits with what Wall Street is currently seeing from investors. As is the case in a gamma squeeze, EVFM stock is shooting upward as call buying generates higher share prices. If that’s what’s going on, investors can expect shares to continue heading higher.

Of course, this leads to the question of how long the climb can continue. As is the case with all squeezes, no one can say for sure. What we do know is that EVFM stock has the potential to keep rising. Contrarian investors like the company and they take comfort in the fact that contraceptives are in focus right now. It’s an ideal gamma squeeze candidate — Fintel’s numbers prove as much.

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On the date of publication, Samuel O’Brient did not hold (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.


Article printed from InvestorPlace Media, https://investorplace.com/2022/07/is-evofem-biosciences-evfm-stock-the-next-big-squeeze/.

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