GameStop $21 Call 0DTE Holders Get Crushed; Tesla, AMC Call Options Slump
(Here's an update to the options I wrote about earlier this week for readers who are curious whether those positions paid off.)
$GameStop(GME.US$ call option holders got crushed as zero-days-to-expiration (0DTE) contracts quickly lose their value amid an extended stock sell-off that sent the share price back to its level before meme-stock guru Roaring Kitty returned to social media X and sparked a frenzy.
GameStop shares extended their slump to $22.10 from this week's peak of $64.83 after the video game retailer released preliminary fiscal first quarter results that showed net sales will drop to a range of 872 million to 892 million, from $1.237 billion a year earlier. The company also told the Securities and Exchange Commission that it may sell as much as 45 million shares, diluting the stake of existing shareholders.
Call options that give the holders the right to buy GameStop shares for $22 each lost 95% of their value as the stock closed just 21 cents above that level, after slumping 20% on Friday. Not everyone is hurting though.
On Thursday, I wrote about whales who sold a combined 9,000 contracts giving the holders the right to buy GameStop shares at $20 by the time the market closed today. Buyers of those options paid a premium of at least $12.35 per share or a total of $11.7 million for those block trades. The contract's price sank 71% to $2.28 a share Friday, leaving the sellers millions of dollars in windfall, if they opted to buy back the call options before the market closed.
AMC $4 Options Sink
The $AMC Entertainment(AMC.US$ call options we featured on Monday held up better, but not that much. Contracts that give the holder the right to sell AMC shares at $4 each by close of today were one of the most-active options tied to the stock that day.
While those calls closed 41% lower at 42 cents Friday in New York, those who bought them at $1.21 at the start of the week and held on to them until now, are likely under the water. The $4 calls peaked at $7.50 on Tuesday, before sinking.
Tesla's Options Exodus
In the case of the $Tesla(TSLA.US$ call options that we wrote about last Wednesday, those who joined the exodus earlier this week saved themselves from the excruciating pain of watching the value of those contracts dwindle 96% on the day of expiration. Volume on call options that give the holder the right to buy Tesla shares at $180 each jumped to 224,410, almost four times the open interest as the stock closed at $177.46, more than $2 below that strike price.
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Former editor at Bloomberg, then Lazard Asset Management. Posts aren’t investment advice. Views are just mine.
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Jason Chapman2 : Stop
R0ck3t : Not crushed if exercised on Monday and share price goes back up
Texashodl : It’s all coming to an end for the criminals shorting GME and the market makers as the leaps expire from 21’ this next Wednesday as the 39 month time is up.
72783258 : tanks light and your Friend chummy...
Gil Bates Texashodl: Bro they have both ways covered this time around. Do you really think they’d fall for the same thing twice?
maddhatter Texashodl: You are delusional. It’s all the bad guys versus you? No, it’s Market fundamentals, pure and simple. Put down the pipe.
By the way, the bad guys couldn’t care less about you.
Texashodl Gil Bates: They never covered the first time the did leaps. Leaps push shorts to market makers for 39 months. Next Wednesday is the deadline. The market makers prayed that retail would leave but they didn’t. Leaps expire next Wednesday. They never covered. Lol checkmate
Texashodl maddhatter: They never covered the first time the did leaps. Leaps push shorts to market makers for 39 months. Next Wednesday is the deadline. The market makers prayed that retail would leave but they didn’t. Leaps expire next Wednesday. They never covered. Lol checkmate
Texashodl maddhatter: They never covered the first time the did leaps. Leaps push shorts to market makers for 39 months. Next Wednesday is the deadline. The market makers prayed that retail would leave but they didn’t. Leaps expire next Wednesday. They never covered. Lol checkmate
Imtiazmast : Why someone buys call or option with market price on this junk? Buys in limit price or will make nothing . I had 1 call and 1 put but both were limit price
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