GameStop Share Fluctuations Challenge Roaring Kitty’s Options Position

Riverside, CA – Keith Gill, the YouTuber known as “Roaring Kitty,” who played a significant role in the 2021 GameStop (GME) stock surge, faces challenges with his current options holdings in the company. The recent stock price volatility and approaching expiration date for his options contracts create uncertainty about his potential gains.

GameStop’s share price has fluctuated dramatically this week. After a Friday high of $48, the stock price dipped by 8% on Tuesday before finishing the day up 23% at $30.49. This volatility directly impacts the value of Gill’s options contracts.

Earlier this month, Gill disclosed a large options position in GameStop. This included 120,000 call options with a strike price of $20, purchased for $5.67 per contract, and representing a total investment of $68.1 million. The value of these options initially soared on Friday, reaching $28.41 each. However, Tuesday’s price swings caused the value to fluctuate significantly.

The time-sensitive nature of these options contracts adds another layer of complexity. As the June 21 expiration date approaches, the value of the contracts will erode due to “time decay.” Gill has several options to consider:

• Sell the options contracts: This allows him to capture any current gains before expiration. However, market data suggests he hasn’t executed such a move yet.
• Exercise the options and purchase the stock: This would require Gill to come up with $240 million to acquire the underlying 12 million GameStop shares.
• Let the options expire worthless: If the stock price remains below $20 by June 21, the options will expire without any value.

Market experts like Henry Schwartz, from Cboe Global Markets, highlight the role of market makers in this situation. These institutions facilitate options trading but aim for market neutrality. If they sold Gill the call contracts, they likely hedged their position by buying GameStop shares. A continued price decline could prompt them to sell those shares, potentially pushing the stock price further down.

Overall, Gill’s situation with his GameStop options position remains fluid. The upcoming expiration date and ongoing stock price volatility create uncertainty about his potential gains. Market watchers are closely following developments, particularly any actions Gill might take to manage his options before they expire.