The jump in volume sparks speculation that Keith Gill might be selling some of his hefty options position
Volume in options contracts associated with Keith Gill, also known as “Roaring Kitty” and “DeepF——ingValue,” surged on Wednesday.
A selloff in GameStop shares on Wednesday corresponded with a surge in volume for call options believed to be owned by Keith Gill, better known by his online handles "Roaring Kitty" and "DeepF-ingValue."
The heavy volume sparked speculation on X that Gill, who helped pioneer the original meme-stock craze in 2021 and recently broke his silence on social media after a three-year lull, might be selling some of a sizable options position he first unveiled in posts on Reddit published earlier this month.
GameStop shares slumped 16.5% on Wednesday, with losses accelerating after 3 p.m. Eastern. Around the same time, data from Unusual Whales, a service that offers options-market data, showed a spike in volume in the calls, which have a strike price of $20 a contract and are due to expire on June 21. Shares closed at $25.46, but have moved slightly higher in after-hours trade, according to FactSet data.
According to FactSet data, these calls were the most heavily-traded contracts attached to GameStop on Wednesday. A total of 93,266 contracts changed hands, compared with open interest - or the number of contracts outstanding - of 169,963. The contracts were worth $6.40 apiece as of Wednesday's close, down $4.85 on the day, a drop of more than 40%. According to screenshots of his brokerage account, Gill paid about $5.68 per contract, on average.
To be sure, it's unclear who was selling and who was buying these contracts. It's also unclear whether the sales were part of a broader strategy. In addition to selling or exercising options, options traders can "roll" their positions, which entails selling their contracts and buying more that expire further in the future.
According to the latest update of his E-Trade account holdings published on Reddit on Monday, Gill still owned 120,000 of these contracts, the same amount he had held when he first disclosed his position on a subreddit dedicated to GameStop earlier this month. He also owned 5 million of the company's shares.
GameStop shares fell on Wednesday as the company announced that it had raised around $2.14 billion after selling another 75 million shares of its stock in a sale it had first announced late last week. That followed 45 million shares the company sold late last month for nearly $1 billion.
In other news, Andrew Left, the short-seller behind Citron Research, announced about an hour before Wall Street trading opened that he had closed out his latest bet against the stock.
Gill's plans for closing the position have stirred lots of speculation on social media. Screenshots of his brokerage account appear to show roughly $30 million in cash, far less than the $240 million he would need to exercise the options and take possession of another 120 million shares of GameStop. Even if he sold all his GameStop shares at the current price, he would still fall short of the money needed to exercise the contracts.
The investor said during a livestream last week that he wasn't working with any outside parties.
Representatives from Morgan Stanley, which owns E-Trade, never responded to a MarketWatch request for comment last week about how the company might handle Gill's options position.
A page on E-Trade's website outlining its policies surrounding option-contract expiration states that E-Trade can pre-emptively close out options positions when the owner of the contracts doesn't appear to have enough liquidity to exercise them. The electronic brokerage can also label them "do not exercise," which would result in them expiring worthless.
As of Wednesday's close, Gill's contracts were still "in the money" - meaning they could be exercised or sold for a profit.
Comments