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Strategists Speculate That Roaring Kitty May Have Cut Gamestop's Options Position

Options Newsman wrote a column · Jun 13 08:49
A surge in trading activity for certain short-dated GameStop options contracts on Wednesday has led some option strategists to speculate that Keith Gill, the influential investor known as "Roaring Kitty," may have offloaded part of his recently disclosed options position in the company.
Gill, who gained fame for his role in the meme-stock frenzy of 2021, recently revealed a significant stake in $GameStop(GME.US)$ through multiple screenshots posted on Reddit. The screenshot indicated that he held 120,000 GameStop June 21 call options at a strike price of $20, costing $5.6754 per contract, totaling an investment of $68.1 million. Additionally, Gill disclosed ownership of 5 million GameStop shares.
On Wednesday, some 93,000 of the call options with the same expiration and strike price changed hands, some of them in large chunks of 5,000 contracts or more. This activity has fueled speculation among market participants that Gill might be selling some of his holdings.
Strategists Speculate That Roaring Kitty May Have Cut Gamestop's Options Position
The speculation is partly based on the fact that the number of people holding specific option contracts is significantly lower than those holding the stock, providing some basis for the theory that Gill may have reduced his options position.
According to Trade Alert data, the contracts traded at an average price of $7.65, with many transactions occurring below the bid price, suggesting a potential sell-off effort by a significant holder.
Options strategists have posited that Gill might need to sell his calls before expiration or roll the position into another set of call options to avoid the substantial cash requirement for exercising them on June 21. Gill would need approximately $240 million to acquire 12 million shares at $20 each to exercise the calls.
(It) looks like he is closing the position," said Chris Murphy, co-head of derivatives strategy at Susquehanna International Group, "while he did not finish closing he probably has enough cash now to exercise the rest if he wanted to."
Gill's apparent strategy to trigger a substantial short squeeze in GameStop and elevate his holdings' value was thwarted following a surprise stock offering by the company. The issuance of up to 75 million new shares flooded the market, causing GameStop's price to plummet by 40% on Friday, leaving it well below the threshold Gill needed.
"We won't know for sure until we see the open interest figures tomorrow morning, but I can't imagine who else would pound out such huge sales at discounts," said Steve Sosnick, Interactive Brokers' chief strategist.
While the exact details of Gill's trades remain unclear, the market continues to watch closely, as any significant move by "Roaring Kitty" could have a notable impact on GameStop's stock price.
Source: Reuters, CNBC
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