Shares of GameStop Corp. fell 16% overnight after sell-off intensified towards the close of Wednesday's trading session on Wall Street. Interestingly, the call options owned by meme stock trader Keith Gill, also known as "Roaring Kitty" in Reddit circles, saw a spike in trading volumes.
Gill had disclosed his portfolio on Monday night, which revealed that he still owned 1.2 lakh call options of $20 strike, which had an expiry of June 21. The same strike price and expiry saw 93,266 contracts being traded on Wednesday, which is nine times higher than its 30-day average volume of 10,233 contracts. The price of that contract itself fell more than 40% during the session.
The $20 calls traded as high as $13.90 each earlier Wednesday, dropping to $6.40 at the close. That’s still above his purported average purchase price of $5.6754.
While it is unclear whether Roaring Kitty was behind the surge, market participants do believe he could be involved given he is such a large holder of these contracts.
Options traders speculate that Gill would have to either sell his calls prior to the expiry or roll the position into another call option to avoid raising large amounts of cash to exercise them on June 21.
GameStop shares rallied earlier to as high as $45 after Gill returned to Reddit and disclosed a position in the stock. Taking advantage of the rally in the stock price, GameStop Corp. also ended up selling shares worth $2.1 billion.
Shares of GameStop ended 16.5% lower on Wednesday at $25.46.
Gill had disclosed his portfolio on Monday night, which revealed that he still owned 1.2 lakh call options of $20 strike, which had an expiry of June 21. The same strike price and expiry saw 93,266 contracts being traded on Wednesday, which is nine times higher than its 30-day average volume of 10,233 contracts. The price of that contract itself fell more than 40% during the session.
The $20 calls traded as high as $13.90 each earlier Wednesday, dropping to $6.40 at the close. That’s still above his purported average purchase price of $5.6754.
While it is unclear whether Roaring Kitty was behind the surge, market participants do believe he could be involved given he is such a large holder of these contracts.
Options traders speculate that Gill would have to either sell his calls prior to the expiry or roll the position into another call option to avoid raising large amounts of cash to exercise them on June 21.
GameStop shares rallied earlier to as high as $45 after Gill returned to Reddit and disclosed a position in the stock. Taking advantage of the rally in the stock price, GameStop Corp. also ended up selling shares worth $2.1 billion.
Shares of GameStop ended 16.5% lower on Wednesday at $25.46.
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