There is plenty of support lingering below to capture HIMS’ latest downturn
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Telehealth stock Hims & Hers Health Inc (NYSE:HIMS) nabbed an all-time high last week after a push above $30, which happens to be three times its 2019 initial public offering (IPO) price. The peak was followed by a sharp pullback, which may have been exaggerated by an unwinding of long positions associated with expiring November call open interest (OI) and delta-hedge selling related to heavy out-of-the-money OI in 11/22 through standard December options.
There is plenty of support lingering below to capture this latest downturn, making now a good time to bet on a rebound. The $19-20 region is home to the last put-heavy strikes, the 50-day moving average, and a trendline connecting higher lows since September.
The shares are also above the 61.8% Fibonacci retracement level connecting their September low and recent high, and $17.90, which represents double the stock’s 2023 close.
Short interest has nearly tripled since March, and shorts will likely use the recent pullback to cover, as most have been burned by the stock’s outperformance. This could add fuel to the equity’s rally in the coming months.
Our recommended February call has a leverage ratio of 2.8, and will double on a 39.2% rise in the underlying security.