GameStop. No, Really - Please Stop These Games
Just because all the cool kids are setting their money on fire...
So, as we all know, our friendly neighborhood GME analyst (who is not a cat) reminded the world that when it comes to GameStop, he just “likes the stock.”
Unlike when you or I post something, a lot of investors took notice. For anyone wondering what prompted Roaring Kitty to post this on May 12, the answer is that after about a year of GME trading about 3 million shares a day, the stock averaged about 32.5 million shares a day between May 3 and May 10. His post hit the airwaves on Sunday the 12th. Monday saw GME trade187.2 million shares and close 74% higher to $30.45. Tuesday saw just under 207 million shares cross hands and despite hitting $60 in the pre-market, saw the name rise an additional 60% to close at $48.75. Today GME is looking at about 110 million shares traded with the stock closing around $40.
This is some impressive price action and volume but what really caught my interest was the action in the options market which prompted me to tweet this out earlier today. From what I can tell, it looks like last week had this Friday’s expiration posting strikes going to out to 30 or so. By Monday, the series had strikes as high as 57 and after last night’s close the series extended to include strikes out to 128! Keep in mind, I’m talking about contracts that expire this Friday (5/17/2024). What really rocks my world is that 21,395 of the 128 strike contracts were purchased just today. Another notable strike seeing wild volume is the 100 strike with 18,374 contracts traded today. Looking through some of the other expirations, strikes are extended as well but there is nowhere near the kind of volume we’re seeing for this Friday.
Playing in the tails of an option series is cool I guess and I’m all for the occasional scratch-off ticket but collectively dropping about $700K on the idea that GME is going to close above 128 (because remember, GME closing at $128 on Friday means you still lost money in the form of your premium paid) has to be, in the words of the denizens of r/WallStreetBets over at Reddit one of the more “regarded” moves I’ve seen in a while.
And, just because this all takes me back to 2021, here is a link to what I consider possibly the best thing to come out of the whole meme stock craze, the Diamond Hands, Rocket video. Sound up as this song, as my kids would say, “slaps” despite being slightly NSFW on some language.