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Traders Picked Up GameStop Options Ahead of ‘Roaring Kitty’ Hype

Traders Picked Up GameStop Options Ahead of ‘Roaring Kitty’ Hype
An employee assists customers inside a GameStop Corp. store in Louisville, Kentucky, U.S., on Thursday, March 15, 2018. GameStop Corp. is scheduled to release earnings figures on March 28. Photographer: Luke Sharrett/Bloomberg

Traders quietly gathered positions in GameStop Corp. options leading up to Monday’s wild rally in the meme stock. 

Call option volume on Friday neared 300,000 — the second most active day this year, trailing only May 3. The activity aligns with GameStop’s soaring stock price, which jumped 68% in the three weeks through last Friday as trading volume took off.The heavy volume over the past several weeks came despite a dearth of corporate catalysts or news that could drive a rally in the shares. It also predated the oblique Sunday night tweet from the account associated with Keith Gill, who drove the meme-stock mania of 2021 under the moniker “Roaring Kitty,” stoking speculation that Gill, whose X account has been inactive for almost three years, might return to social media. He tweeted again on Monday morning, although neither post specifically mentioned GameStop.

GameStop Calls Saw Elevated Trading in May | Before 'Roaring Kitty' speculation, calls moved in high volume

Read more: GameStop Surges as ‘Roaring Kitty’ Return Adds Fuel to Rally

On Friday, $20 and $30 calls dominated Gamestop trading. But at the end of that session they still required rallies of 15% and 72% respectively to come in the money. Within hours of Monday’s stock market opening, both contracts became profitable as the shares climbed as high as $38.20.

Throughout May, mentions of Gamestop on online forums like Reddit’s WallStreetBets and StockTwits accompanied jumps in its volume and options activity. Roughly 160 million shares changed hands in the week through May 10, the most active week for the video-game retailer’s equity since soaring in April 2022 on plans of a stock split and a short-lived meme stock revival.

“I find it quite interesting that the volume and open interest in upside calls expiring May 17th steadily rose during the week,” said Steve Sosnick, chief strategist at Interactive Brokers. “It all seems a bit convenient.”

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