Stem Soars 24%—Is the Short Squeeze the Catalyst?

Summary
• STEM shares surged 24.15% intraday, surging past $18.61 from a $15.97 open
• Short interest exceeds 18% of float, fueling speculation of a short squeeze
• CARZ ETF (65.335) edged up 0.145%, hinting at sector optimism

STEM’s explosive 24% rally has ignited market chatter about a short squeeze. With over 18% of the float sold short, rising prices have forced bears to cover, amplifying the upward momentum. The stock’s surge has outpaced its 200-day moving average of $1.59 and pierced the 52-week high of $33.6, despite the company’s $800M losses and dilutive reverse split.

Short Squeeze Dynamics Fuel STEM's Explosive Move
STEM’s 25%+ surge is driven by a classic short squeeze triggered by its recent 200% rally from June lows. With 18% of shares sold short, rising prices have forced bearish investors to buy back shares to limit losses, creating a self-reinforcing loop. The stock’s move above key moving averages and its 27.78% turnover rate—far exceeding its 200-day average—signal strong speculative demand. Meanwhile, news of the STEM Trekkers program, while positive for brand image, lacks direct financial impact, leaving the short squeeze as the primary catalyst.

Capitalizing on STEM's Volatility: ETFs and Options Playbook
• MACD: 2.956 (above signal line 2.565), RSI: 73.11 (overbought), Bollinger Upper Band: $16.96 (below current price)
• 200-day MA: $1.59 (far below), 30-day MA: $7.82 (bullish divergence)

STEM’s technicals scream short-term momentum, with RSI in overbought territory and MACD widening. The First Trust S-Network Future Vehicles & Technology ETF (CARZ), up 0.145%, offers leveraged exposure to AI-driven energy themes. For options, two contracts stand out:

• STEM20250815C17.5 (Call, $17.5 strike, Aug 15 expiry):
- IV: 130.73% (high volatility)
- Leverage: 6.33%
- Delta: 0.6657 (moderate sensitivity)
- Theta: -0.0765 (rapid time decay)
- Gamma: 0.0643 (high sensitivity to price moves)
- Turnover: $50,882
- Payoff at 5% up: $1.05 per share (29% return)
- Why it works: High gamma and IV suggest outsized gains if STEM stays above $17.5.

• STEM20250815C20 (Call, $20 strike, Aug 15 expiry):
- IV: 139.39% (extreme volatility)
- Leverage: 9.49%
- Delta: 0.5003 (balanced sensitivity)
- Theta: -0.0807 (aggressive decay)
- Gamma: 0.0661 (high responsiveness)
- Turnover: $58,744
- Payoff at 5% up: $0.90 per share (34% return)
- Why it works: High leverage and turnover make it ideal for riding the short squeeze.

Action: Aggressive bulls should target STEM20250815C20 into a break above $19.48 (intraday high). Traders should monitor the 52-week high of $33.6 as a critical resistance level.

Backtest Stem Stock Performance
The backtest of STEM's performance after an intraday increase of 24% shows mixed results. While the 3-day win rate is 49.61%, the 10-day win rate is lower at 43.05%, and the 30-day win rate is 41.89%. This suggests that STEM tends to have short-term volatility following a significant intraday surge.

STEM's Volatility Spree—Time to Ride the Wave or Exit the Squeeze?
STEM’s short squeeze has created a high-stakes game of momentum versus fundamentals. While technicals favor continuation, the stock’s -1.56x P/E and $800M losses pose long-term risks. Investors should watch the STEM20250815C20 call and the sector leader NextEra Energy (NEE), which fell -0.967% today, for signs of broader market sentiment. If STEM breaks $20, the short squeeze could accelerate—watch for a 52-week high test or a breakdown below $15.69.