Shares of GameStop Corporation GME options owned by Keith Gill, aka Roaring Kitty, are set to expire in the coming weeks.
What Happened: Gill’s return to social media reignited a surge in meme stocks like GameStop reminiscent of the 2021 short squeeze that saw retail investors take on hedge funds and short sellers in an epic battle.
Various memes and videos shared on social media helped boost GameStop shares. But the unveiling of Gill's most recent position in the video game retailer inspired confidence in the stock once again.
Gill revealed that he owned five million shares of GameStop and 120,000 call options.
He purchased the shares at an average price of $21.274. The options are for the $20 strike price with an expiration on June 21. The options were bought for $5.6754 each.
With a surge in the price of GameStop shares, Gill's positions in GameStop were worth about $1 billion. That’s before shares fell on the heels of quarterly earnings. The company also announced a second share offering since Gill's social media return.
A live stream of Gill on YouTube, which was highly anticipated, saw over 600,000 people tune in live.
But the price of GameStop stock fell during the live stream.
Gill indicated that he was investing in GameStop for the same reasons he did back in 2021. "It becomes a bet on the management," Gill said, referring to GameStop CEO Ryan Cohen‘s ability to turn the company around.
Gill said he sees a strong long-term for GameStop, but he could soon face a huge short-term decision.
Related Link: Who Is Roaring Kitty? Why Does His Return To Social Media Matter For GameStop Stock?
What's Next: Gill could sell the options before they expire on June 21. He may also exercise the options to accumulate additional GameStop shares. Both options come with risks.
Gill's large stake in GameStop had several investors questioning if he was working with a large backer. Gill denied this during the livestream. To exercise the options for an additional 12 million GameStop shares, Gill would need to capital to acquire the shares at the strike price of $20.
Selling the options could also come with risks. The large size could make getting rid of the position hard. It’s also possible that some investors could see the sale of the options as Gill not being as bullish as he said he is.
Interactive Brokers Chief Strategist Steve Sosnick recently said that selling the 120,000 options would be very difficult to do without attracting attention and with more people watching GameStop options in recent weeks.
"It's much easier to sell 10 to 12 million shares than if you sold 120,000 call options," Sosnick said.
On Tuesday, the GameStop options trade at $6.50, which is still higher than the price that Gill paid. With GameStop shares falling in recent days, the options have hovered around a positive gain for Gill and the risk of going under the $5.6754 he paid for each call option.
Gill’s GameStop stock position is up 16.7%, according to a June 10 update on Reddit. His call options are up 20.2%. On Monday, Gill's total GameStop position, which he paid $174.5 million for was worth $235.5 million and up 18.1%.
GME Price Action: GameStop shares trade at $25.20 on Tuesday versus a 52-week trading range of $9.95 to $64.83.
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