Shares of the Sunnyvale, California-based technical support company soared by as much as 118% to a record high $42.93 apiece before paring their gains. The stock, which has been halted several times due to volatility, was up 448% over the past nine sessions.
A "Gamma squeeze + momentum buying + some short covering = monster rally," wrote Ihor Dusaniwsky, managing director of predictive analytics at financial-analytics firm S3 Partners.
A gamma squeeze occurs when open options positions force additional buying of the underlying stock. Such an instance occurred when AMC Entertainment shares skyrocketed earlier this year.
The squeeze in Support.com shares that has occurred over the past week has sent short-sellers scrambling to cover their positions, resulting in interest decreasing by 238,000 shares.
Still, short interest is $117.45 million, or 5.96 million shares which account for nearly 60% of the float, or shares available for trading, S3 data shows.
Traders betting against Support.com have $71 million in mark-to-market losses in August, according to S3. They have lost $95 million this year.
Support.com on March 22 announced an all-stock merger with Greenidge Generation, a bitcoin mining and power generation company. Support.com shareholders are scheduled to vote on the transaction on September 10.
Upon completion of the deal, Support.com stockholders would receive approximately 0.124 shares of Class A common stock of Greenidge for each share of Support.com owned.