The Strongest Meme Stock Returns! Refuse to Cut the Chives, See Through the Market Makers' Script

TL;DR: The GME ringleader is exploiting the monthly options expiration again to engineer a gamma squeeze. Bullish this week, bearish next week.

On Monday premarket, GME spiked 40% higher, and Roaring Kitty, the instigator of GME's 2021 frenzy, resurfaced after 3 years with a meme acknowledging the surge - signaling GME's meme frenzy may be back.

GME's 2021 insane rally began with a 57% spike on 1/13. The following week, it opened at $24.18 on Monday 1/25 but had run to $120.75 by that Thursday's close.

However, on the ensuing Monday 2/1, GME crashed 30% before the frenzy reignited about a month later.

Interestingly, this week's $25 premarket level rhymes with that $24.18 open on 1/25.

The Squeeze Script

Expect this week's script to mirror last time - a combo of expiring options gamma and short covering to drive an upside squeeze, baiting retail to chase.

GME's short interest is 19.72% versus 5-7% for a typical tech stock.

As of 4/30, GME's short sale rebate rate hit 17.36 days versus 1 day typically.

This week's call OI is 253,179 versus just 56,494 puts, for an extreme 0.2231 put/call ratio.

Looking at OI by strike, the highest is 30 followed by 25. While not a continuous strike ladder, paired with short covering it may have a shot at breaching 30.

Whether it can revisit the 120 highs depends on if dealers open those higher strikes and if retail has the firepower to chase. Without new OI at higher strikes opening, it signals we're nearing the top (like I analyzed for Reddit's options).

Following the Leader

You may think the ringleaders have no positions, but I don't buy it. And their bullish horizon still seems to be 1 week.

The crew pumping this likely has basis around $10-12 from buying on 4/24-4/26 ($GME 20240524 12 CALL$ , $GME 20240517 12 CALL$ $GME 20240517 11 CALL$ ). With 1 week to expiry, sustained upside seems unlikely - they're just harvesting this monthly expiry.

If we see major covering in those $11/12 strikes, it likely signals the top is in and time to consider fading.

Notably, there's already put buying for next week ($GME 20240524 5 PUT$ ). I'd expect those puts to really ramp up as this squeezes this week.

So rally this week, sell off next? Sounds like the same old script, no?