Roaring Kitty's GameStop Options Positions Trigger Speculation Amid Surge in Trading

Some unusual trading activity was observed in the short-dated GameStop options contracts on Wednesday, indicating that Keith Gill, also known as Roaring Kitty, might have sold a portion of his recently-disclosed options position in the company. Gill, who played a pivotal role in the meme-stock uprising in 2021, had unveiled a substantial GameStop stock and options position amounting to $115.7 million in early June. The disclosure included 120,000 GameStop June 21 call options bought at an average price of $5.6754 per contract. The latest trading surge saw around 93,000 of these June call options being exchanged, with some trades involving large chunks of 5,000 contracts or more.

Possible Closure of Position

Market participants speculate that Gill might be in the process of closing his position, with Chris Murphy, co-head of derivatives strategy at Susquehanna International Group, suggesting that the recent trading activity indicates a potential closure of the position. This assumption is further supported by the average price of $7.65 at which the contracts changed hands, as revealed by Trade Alert data. Many trades occurred below the bid price, hinting at an attempt by a seller to offload the contracts. Murphy also indicated that Gill might now have sufficient funds to exercise the remaining options, should he choose to do so.

Impact on Options Volume and Position Value

Wednesday witnessed a significant surge in GameStop options volume, reaching 1.2 million contracts, marking a 66% increase from the average daily volume over the past month. Gill's options position has been subject to notable fluctuations, with its value peaking at $341 million before briefly turning negative at $7.5 million on Tuesday. The recent trading activity stirred interest among options market participants, prompting Steve Sosnick, Interactive Brokers' chief strategist, to express uncertainty about the source behind the substantial sales at discounted rates.

Calculation of Position Value

Based on the closing price of $6.40 per contract, Gill's 120,000 contracts would have concluded the session valued at $76.8 million, reflecting an increase of approximately $8.7 million from the purchase price. Meanwhile, GameStop shares closed the session at $25.46, marking a 16.5% decline and a 45% increase for the year.