Is the former “king of bonds” becoming the king of options?
The Zhitong Finance App learned that Bill Gross (Bill Gross), known as the “King of Old Debt,” has developed a habit of selling MEME stock options. His recent trading targets are GameStation (GME.US) and AMC Entertainment (AMC.US). The legendary investor said he sold both company's call and put options. Both companies' shares are soaring, and speculators are using retail traders' favorites as a casino.
In the recent trading storm, GameStop soared 179% in two days, while AMC surged 135%, and Gross commented on X that “Gamestonk” is out of date. “Buy? Selling? He wrote on social media platforms on Tuesday.
His strategy focused on selling what he called “400% annualized volatility.”
The deal was to sell GameStop's $40 call and put options, a so-called cross-modal transaction, and bet that the stock wouldn't fluctuate too much in either direction. He made $22 from his options portfolio. If the closing price was between $18 and $62 last Friday, he would profit; if the closing price was close to $40, he would have made the most profit. He also used a similar strategy to sell AMC in a cross-modal transaction for $10.
GameStop's stock price once soared to $64.83 and closed at $48.75, while AMC closed at $6.85 and opened at $11.88.
About seven weeks ago, Gross sold his former Trump Media options. At the time, Gross was betting that Trump Media's shares would stay between $45 and $95. The stock fell to a low of $22.55 a few weeks later, but rebounded to $53.40 at the close on Tuesday. Gross said he was no longer in that position.
The recent frenzy has spread to many of Wall Street's most hated stocks, reminiscent of the MEME stock boom in 2021, when individual investors scolded short sellers on forums such as WallStreetBets, owned by Reddit Inc., and the chat room StockTwits. The sharp rise in the stock price attracted the attention of a small group of social media celebrities, including Dave Portnoy, founder of Barstool Sports, who bought the stock one after another.
However, even with a rebound, GameStop's stock price was still around 60% below its intraday high, while some AMC investors lost more than 98% of their books. According to data from financial analysis firm S3 Partners, the recent rise in these two stocks made short sellers uneasy, and this month's losses in terms of market capitalization exceeded 1 billion US dollars.