What's up people at Stockaholics. Some of you may be familiar with Reddit's WallStreetBets forum where options gamblers bet big on unrealistic plays. I created a tool that scrapes the forum and logs the sentiment + comment volume of ticker mentions. Today's top trending ticker is NIO, I've included the sentiment chart in an attachment. Having following WSB sentiment for quite some time, I notice it generally goes through different stages of "hype". The progression is generally ordered like this: 1. Meme stock has a big event or significant change in stock price to get the stock "trending". 2. WallStreetBets hops on the bandwagon and usually joins in the rally after-the-fact of the large move. 3. At this point, like in the case with NIO, players purchase calls trying to ride the momentum, which unfortunately might be too late on this +8% day. A different scenario would be the case of Snapchat (SNAP) where users didn't believe in the rally and as the stock price went higher, they were loading up more on PUT options. 4. Finally, what I've noticed with some of these trends is that once the sentiment and comment volume has reached it's prime, it's time to get the hell outta dodge. How Can I Use This In Trading? Similar to the process I mentioned above, I like to monitor sentiment on positions I have open. If sentiment gets too high and I've made a good profit, then I'll most likely trim the position. On the flip side, if the "hype" has died off on a stock, I normally find that being the best time to buy. The hype dying off generally means the stock has been flat for sometime, or gone against there positions and nobody is talking about it anymore. If you want to check out some of the sentiment for other trending tickers, you can find the SwaggyStocks sentiment analysis tool here.
