The Children’s Place Skyrockets 20.3% Intraday, Could This Short Squeeze Ignite a Sector-Wide Revival?

Summary
• PLCE surged 20.3% to $6.28, trading between $5.52 and $6.70
• Turnover spiked to 3.2M shares (43.97% of float)
• Short interest at 50% fuels Reddit-driven buying frenzy
• RSI at 71.35 signals overbought territory
• Sector peers like Kohl’s (KSS) also rallied on similar short-squeeze dynamics

The Children’s Place (PLCE) has erupted in a parabolic intraday rally driven by a Reddit-fueled short squeeze, with retail investors targeting its 50% short interest. The stock’s 20.3% surge to $6.28—trading near its 52-week high of $19.74—reflects a coordinated buying effort amid heightened volatility. With RSI in overbought territory and options volatility spiking to 197.81%, the apparel sector’s speculative frenzy shows no signs of abating.

Reddit Frenzy Ignites Short Squeeze Amid 50% Short Float
The Children’s Place’s meteoric rise stems from a Reddit-driven short squeeze, leveraging its 50% short interest—a vulnerability exploited by retail traders. As buying pressure surged, short sellers were forced to cover positions, accelerating the upward spiral. This mirrors Kohl’s (KSS) 90% rally earlier in the session, where similar dynamics unfolded. PLCE’s 52-week low of $3.66 and -1.02 PE ratio highlight its undervaluation, making it an attractive target for speculative bets. The stock’s 6.28 price point—up from 5.22 at close—now tests the $6.70 intraday high, with options volatility surging to 197.81% as traders bet on further momentum.

Apparel Sector Volatility Spikes as Short Squeezes Spread
Options Playbook: Capitalizing on PLCE’s Volatility with High-Leverage Calls
• RSI: 71.35 (overbought)
• MACD: 0.072 (bullish), Signal: -0.020 (bearish), Histogram: 0.093 (divergence)
• Bollinger Bands: Upper $5.69 (below current price), Middle $4.78, Lower $3.86
• 200D MA: $9.09 (far above), 100D MA: $6.17 (close)
• Support/Resistance: 30D: $4.99–5.25, 200D: $4.99–5.25

PLCE’s technicals suggest short-term bullish momentum, but long-term bearish divergence. The RSI overbought condition and MACD histogram divergence hint at potential exhaustion, yet options volatility remains sky-high. For aggressive bulls, the PLCE20250801C6.5 call (strike $6.5, expiring 8/1) offers 8.18% leverage and 211.01% implied volatility, with 0.51 delta and 0.177 gamma amplifying directional bets. If PLCE breaks above $6.70 (intraday high), the PLCE20250815C6 call (strike $6, expiring 8/15) provides 5.07% leverage and 180.61% IV, with 0.614 delta and 0.132 gamma for capitalizing on continued short-covering. Both options exhibit strong liquidity (turnover $109,472 and $21,002) and theta decay (0.0502 and 0.0267) for time-based gains. A 5% upside to $6.59 would yield 6.5% payoff on PLCE20250801C6.5 and 11.5% on PLCE20250815C6. Aggressive bulls should consider a straddle above $6.70 or short the $7.00 put (PLCE20250829P7) if a $7.00 pivot fails.

Backtest The Children'S Place Stock Performance
The backtest of PLCE's performance after a 20% intraday surge shows mixed results. While the stock experienced a positive surge on the day of the event, the short-term performance was lackluster, with the 3-day win rate being 48.06% and the 10-day win rate being 48.94%. However, the 30-day win rate was slightly higher at 45.05%, indicating that while the stock had a good immediate reaction to the intraday surge, its longer-term performance was relatively muted. The maximum return during the backtest period was 2.55% over 30 days, suggesting that while the stock had room for further upside, it faced resistance or market pullbacks that capped its gains.

Short Squeeze Enters Critical Juncture—Act Now Before Volatility Normalizes
PLCE’s short squeeze has reached a tipping point, with RSI overbought and options volatility at 197.81%—a clear sign of speculative fervor. While the $6.70 intraday high offers a near-term target, the 200D MA at $9.09 remains a distant milestone. Aggressive traders should prioritize the PLCE20250801C6.5 call for immediate upside or hedge with the PLCE20250829P7 put if $7.00 fails. Meanwhile, sector leader NIKE (NKE) rose 0.86% as a proxy for retail sector strength. Watch for a breakdown below $5.52 (intraday low) to confirm exhaustion or a breakout above $6.70 to validate the squeeze’s momentum—either way, volatility is set to normalize within 7–10 days.