The recent sell-off in GameStop shares has intensified, causing concern among investors and traders alike. The spike in trading volume, particularly in call options, owned by meme stock leader Roaring Kitty, also known as Keith Gill, has raised eyebrows regarding the future direction of the stock. With 120,000 call options contracts with a strike price of $20 and an expiration date of June 21, Gill’s portfolio has attracted significant attention.
The unusual surge in trading volume of GameStop calls with the exact strike price and expiration date as Gill’s contracts is a cause for concern. Trading a massive 93,266 contracts on Wednesday, which is more than nine times the 30-day average volume, has raised speculation about the identity of the major player behind these trades. While it remains uncertain whether Roaring Kitty is directly involved in this heightened activity, options traders have suggested his potential role due to his substantial holdings of these contracts.
The uncertainty surrounding Gill’s next move has led to speculation among Wall Street analysts and traders. The possibility of Gill having to sell his calls before the expiration date or rolling the position into another call option has created a sense of unease in the market. The fear of a massive cash requirement to exercise the contracts on the 21st of June has fueled rumors of potential sell-offs that could impact the stock price significantly.
In order to exercise the calls, Gill would need to come up with $240 million to acquire the stock at the strike price of $20 per share. This amount exceeds his publicly disclosed holdings in his E-Trade account, leading to questions about his financial capacity to carry out such a transaction. The potential impact of Gill’s actions on the stock price has kept traders on edge as they try to anticipate his next move in the volatile market environment.
The heightened options trading volume and uncertainty surrounding Roaring Kitty’s positions have added a new layer of complexity to the GameStop saga. With conflicting signals and market speculation at play, investors must exercise caution and stay informed to navigate the evolving situation effectively.