- Recent trading activity surge in short-dated GameStop options sparked speculation about a potential sell-off by Keith Gill, known as Roaring Kitty.
- GameStop’s (GME) stock experienced a 7% rise, trading at $27.15 on Thursday morning.
- Keith Gill, famously involved in the 2021 meme stock phenomenon, disclosed significant GameStop holdings in his recent Reddit post.
Discover how the latest trading frenzy and Keith Gill’s movements are impacting GameStop’s market dynamics.
GameStop Trading Frenzy: Analyzing Keith Gill’s Recent Moves
On Wednesday, there was a noticeable surge in trading of short-dated GameStop options, leading to conjecture that Keith Gill, widely known as Roaring Kitty, might be liquidating part of his recently disclosed options position in GameStop. As a result, GameStop’s stock saw a 7% increase, reaching $27.15 in morning trading on Thursday.
Keith Gill’s Position and Market Reactions
Gill, a pivotal figure in the 2021 meme stock rally, revealed on June 2 through a Reddit post that he held 120,000 GameStop call options expiring in June at a strike price of $20, purchased at an average of $5.6754 per contract. This holding amounts to a substantial $68.1 million investment. In addition, he owns 5 million shares of GameStop, currently valued at approximately $115.7 million.
Unexpected Volume and Price Movements
On Wednesday, about 93,000 June call options for GameStop changed hands, with some transactions occurring in large blocks of 5,000 or more contracts. While it remains unconfirmed whether Gill was involved, data from Trade Alert indicated that these contracts traded at an average price of $7.65. Notably, several trades occurred below the bid price, suggesting the possibility of a significant seller attempting to offload the contracts.
Implications and Market Speculations
Chris Murphy, co-head of derivatives strategy at Susquehanna International Group, pointed out that the trading activity indicates a possible closing of Gill’s position, although he might still have enough liquidity to exercise the remaining contracts if he chose to do so. The overall options trading volume for GameStop on Wednesday surged to 1.2 million contracts, marking a 66% increase from the stock’s average daily volume over the previous month, per Trade Alert data.
Volatility and Future Outlook
The value of Gill’s options position has undergone significant volatility, peaking at $341 million before dropping by $7.5 million on Tuesday. Market analysts and participants have been closely following his movements since the disclosure. Steve Sosnick, Interactive Brokers’ chief strategist, emphasized that while exact details would emerge from the open interest figures, the large-scale sales at reduced prices suggest Gill’s involvement. As of now, Gill’s 120,000 contracts are collectively valued at $76.8 million, yielding an $8.7 million gain from his purchase price.
Conclusion
This recent trading activity underscores the significant influence prominent traders like Keith Gill have on market dynamics. While speculative in nature, these movements offer a glimpse into the strategies deployed by high-profile investors. It remains essential for market participants to stay informed and analytical to navigate the complexities of such volatile trading environments.
