Looking deeper within this universe, stocks with lower long/short (L/S) ratios—indicating higher relative short interest as a percentage of float—tended to exhibit higher realized volatility.

These stocks in the universe also showed elevated implied volatility, consistent with S3’s short interest analytics and crowded shorts data.

Key Insight: By linking S3’s Long-to-Short ratios with volatility and option-pricing signals, investors could identify where implied vol was rich versus realized risk—avoiding overpriced protection in names like GME and spotting underpriced risk in SMCI. The framework provided a clearer lens on where volatility was fairly priced versus stretched, supporting more informed positioning.

They also had richer option premiums compared to fair value, reflecting heightened short squeeze risk, increased crowded trade sentiment, and elevated volatility expectations.

GME’s implied volatility is pricing in significantly more than its recent realized volatility—even with earnings approaching. Its L/S ratio stands at 0.76, placing it firmly in lower end of S3’s Battleground Stocks category.

SMCI’s implied volatility is notably lower than its realized volatility, suggesting a possible underpricing of risk or a volatility disconnect. Its L/S ratio is 1.05, indicating a more balanced long/short position.

Want to know more? Access this data in real time using S3’s BLACK APP & BLACK MAP

The information herein (some of which has been obtained from third party sources without verification) is believed by S3 Partners, LLC (“S3 Partners”) to be reliable and accurate. Neither S3 Partners nor any of its affiliates makes any representation as to the accuracy or completeness of the information herein or accepts liability arising from its use. Prior to making any decisions based on the information herein, you should determine, without reliance upon S3 Partners, the economic risks, and merits, as well as the legal, tax, accounting, and investment consequences, of such decisions.

Stocks