Traders betting on huge GameStop share price rally
Options in GameStop Corp. are seeing wild volume as traders bet that the stock will rally 50% in little over a week.
An 8 December $20 call option changed hands 17,500 times by midday in New York.
The vast majority of the positions were newly opened and traded in small blocks throughout the morning — a sign that appetite could be coming from individual retail traders.
GameStop has long been a favourite of the Wall Street Bets crowd, who notoriously pushed the shares up 2,700% within a few weeks back in January 2021.
The trade “brings back memories of the meme craze, albeit at a much smaller magnitude,” said Daniel Kirsch, head of options at Piper Sandler & Co.
He doesn’t think the stock is likely to have another surge like the one that happened during the Covid-19 lockdowns.
The 8 December calls came cheap, anywhere from 6 cents to 21 cents per contract.
The positions would also capture the video gaming retailer’s earnings report, which is scheduled for 6 December.
Options markets are implying a 12% move in the underlying shares — far short of the advance needed to make the 8 December call option in-the-money, according to data compiled by Bloomberg.
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