Telehealth Stock Looks Primed for a Short Squeeze

There are strong quantified results when Hims and Hers Health Inc (NYSE:HIMS) stock crosses above its 50-day moving average, with an average next-month return of 31.8% and an 83% win rate. HIMS has a nice-looking monthly graph, with pullbacks to its 12-month moving average earlier this month creating supreme buying opportunities. There was also a positive reaction to the company’s expansion of low-testosterone treatments, showing their efforts to expand beyond weight-loss drugs.
 
Short interest is at a record high, and with a 38% of the stock’s total available float sold short, a short squeeze could create more tailwinds. And despite a 100% year-to-date gain, 10 of the 14 brokerages covering HIMS maintain “hold” or worse ratings, fueling the contrarian potential.

Options-specific support rests at $50, home to peak call open interest (OI). Implied volatilities (IV) are also lower than 85% of daily readings in the past year, making now the time to strike with premium-purchasing.

Our recommended December call has a leverage ratio of 2.9, and will double on a 36.6% rise in the underlying security.