Trump Media Stock (NASDAQ: DJT) A Big Premarket Gainer As Volume Spikes

DJT stock (NASDAQ: DJT) was one of the big gainers during yesterday's session, with the price increasing 21.19% by the close of regular trading. At one point through the day, Trump Media's share price had added more than 30%, before pulling back slightly into the close. In pre-market trading DJT shares are now more than 9% up from the close.

The announcement of a $69.4million cash injection from the sale of warrants, options call volume spiking above average, and the upcoming political events on the horizon combining for a much welcome strong day for DJT holders.

As the United States approaches the November election, and eyes turn towards the first debate (to be held on Thursday, June 27, 2024, starting at 9:00 p.m. EDT in Atlanta, Georgia), attention is growing in Trump Media and the impact of the event on price action. It seems that many traders are taking a position in short term options in anticipation of the date, currently with a bullish tilt.

A spike in volume to the tune of 3x usual levels has been seen in DJT, with a bullish option flow (put/call ratio of 0.42). More than 66,000 calls, with an increase in implied volatility indicates an expectation from traders and market makers of movement. For the 28th June expiry, the most active prices on calls are $35's, and $30's which are not both close to being in the money.

The surge in volume swung from both options and stocks. Almost 23 million shares of DJT changed hands during the day, making it the 5th highest day on a volume basis through the year. With the stock price closing out at $33.52 on a heavy volume day, this was a day for the bulls but not all has been smooth sailing in recent times.

Despite former President Donald Trump's legal challenges and political manoeuvres continuing to draw significant attention, the stock experienced the first strong day since the share price started to dip from May 30th. Having dipped almost 50% in less than 1 month, the question on many lips is if yesterday's push to the upside a dead cat bounce, or a more meaningful correction from a new level of support. Support is not something Trump is short of.

In an unprecedented financial surge following his conviction, Trump's campaign received over $52 million within just 24 hours, signalling a formidable mobilization of his support base. This fundraising success underscores the unwavering loyalty of Trump's followers and their readiness to contribute financially to his political aspirations.

Ex-President Trump's strongholds appear to be enduring as he leads President Joe Biden in six swing states—with Wisconsin as the single exception. This presents a serious challenge for Biden's campaign, potentially facing defeat in the Electoral College despite possibly securing a majority of the national votes. Trump's vocal rallying cry for coal, oil, and gas expansively dubbed a ‘drill baby drill' stance, seems to incite minimal political fallout, revealing the complexities of voter concerns and priorities.

With all eyes on the upcoming election and debate, key factors such as the mobilization of non-voters and the vitality of voting bases will be crucial for both camps. The expectation of increased volatility for DJT shares is understandable with such key dates looming, but what this means for the company and the stock longer term is open to much interpretation.

Any type of short term trade is not for the feint hearted, but in a stock such as this one where spikes can occur at the drop of a hat, particular care is needed. The Asktraders team have put together an overview of how options trading works for those looking to start learning, but the journey to familiarity in options takes considerable time.

Long term holders will likely not be dismayed by the volatility seen, as it seems to come with the territory on this one, and gains of 92% since the turn of the year will no doubt be comfort to some.