Market experts are speculating that Roaring Kitty’s Keith Gill, a well-known meme stock trendsetter, may have sold recently-publicized GameStop options amid a surge in trading volume.
Gill, who made a surprise return to social media last month after not posting anything online for years, revealed in a June 2 Reddit screenshot that he holds significant positions in GameStop shares and options.
The screenshots showed that he held 120,000 GameStop June 21 call options with a strike price of $20, purchased at $5.6754 per contract for a total of $68.1 million.
The screenshots also showed that he owned 5 million shares of GameStop stock worth $115.7 million as of June 2.
About 93,000 June call options traded on Wednesday, including some chunks of more than 5,000.
Taking into account trading volume on Wednesday, the contract traded at an average price of $7.65, according to data from Trade Alert.
Many of the deals were done below the bid price, according to Trade Alert data, suggesting sellers may have been trying to get rid of contracts.
“It appears he’s trying to unwind a position,” Chris Murphy, co-head of derivatives strategy at Susquehanna International Group, told Reuters.
“He hasn’t completed the process yet, but he probably has enough cash to exercise the remaining shares,” Murphy said.
It is unclear whether Mr Gill was partly responsible for the bulk sale.
The Post has reached out to Gill for comment.
GameStop options trading volume surged to 1.2 million contracts overall on Wednesday, up 66% from the average daily volume of options on the stock over the past month, according to Trade Alert data.
Gill’s options position has been fluctuating wildly in recent trading, with the value of the position jumping to as much as $341 million before slipping to a $7.5 million deficit on Tuesday.
Options market participants have been watching closely since Gill went public with his position.
“We won’t know for sure until we see the open numbers tomorrow morning, but it’s hard to imagine who else could sell at such a huge discount,” said Steve Sosnick, chief strategist at Interactive Brokers.
Based on a closing price of $6.40 per contract, Gill’s 120,000 contracts were worth $76.8 million at the close of the transaction, an increase of about $8.7 million from when he bought them, according to Reuters calculations.
GameStop shares fell 16.5% to close at $25.46, meaning his options are on track to be “in the money” by the expiration date, one week from Friday.
The stock rose 14% to close at $29.12 on Thursday and is up 66% this year.
If the stock price remains above the $20 strike price, Gill could exercise his option and buy another 12 million shares at the same low price.
But the move would cost $240 million, a sum Gill appears short of.
According to the latest screenshot outlining his GameStop position, Gill had just $29.4 million in cash in his E-Trade account.
If you are unable to come up with the funds to exercise your call options, E-Trade will likely step in and liquidate the options before they expire.
“If they’re still making profits and he doesn’t settle them, the brokerage may be forced to take action on his behalf,” said CC Lagatore, co-founder of brokerage Options AI. He told CNBC.
With post wire
