5/15 GME & AMC Option Flow Tracker: Longs Retreating

tl;dr: There are signs of long capitulation in GME options this week.

News segment first: The Bond King Bill Gross loudly proclaimed that the best trade in GME right now is to short the 400% option implied volatility.

According to Bloomberg, Gross's strategy was to sell GME option straddles, simultaneously selling the 40 strike calls and puts. If GME closes between $18-62 on Friday, Gross profits, with max gain of $2,200 if it closes right at $40. The report noted Gross employed a similar straddlesell in AMC, selling the 10 strike straddle.

While the news details sound plausible, I couldn't find any direct confirmation from Gross himself on these specific trades. He only mentioned shorting volatility in general, not for any particular underlier. Moreover, my scans showed the largest GME 40 straddle traded for this Friday's expiry was just 260 contracts - a $580k max profit if it closed precisely at $40. via $GME 20240517 40 CALL$  & $GME 20240517 40 PUT$ 

Admittedly the size is tiny, but I couldn't find any other notable straddle trades either. Gross lost $10M shorting GME in 2021, which implies he was trading at least 1,500 option contracts back then.

GameStop (GME) Tracker

On Monday, GME options ranked #7 in trading volume across all stocks/ETFs with 800k contracts traded, up 60%. Open interest was more revealing - call OI was up just 6.5% while put OI surged 58%.

The option flow suggests the WSB crowd has matured beyond blindly buying calls. Despite flaunting all-in stock positions, they may well be quietly buying protective puts behind the scenes, as the flow clearly didn't meet dealer expectations. The data also hints at potential long capitulation this week.

Top 3 calls opened:
$GME 20240531 15 CALL$  +447
$GME 20241018 17 CALL$  +262
$GME 20241018 27 CALL$  +200

While new OI strikes from 56-128 aren't captured, the GME 20240517 100 CALL did trade 5,085 contracts with likely seller opens.

The low size in new long call openings, especially the deep out-of-the-money and long-dated strikes, signals an extremely cautious long bias essentially throwing in the towel for this week.

Top 3 puts opened:
$GME 20240517 20 PUT$  +5,613
$GME 20240621 10 PUT$  +5,100
$GME 20240517 30 PUT$  +4,605

Put opening was decent but clearly outpaced calls. Not that bears are aggressively strong, but typical of bear accumulation preferring to leg into longer-dated positions. So there is a modest bear lean but nothing major.

Top closing trades:
$GME 20240517 34 CALL$  -15,807
$GME 20240517 30 CALL$  -6,815
$GME 20240621 18 PUT$  -1,460

Bloomberg's 40 strike rumor for Gross may just have been speculative, but it's a clever strike - inability to hold $40 this week could set up a waterfall drop on Friday given the put OI buildup so far.

The most popular defined risk trade was a 45/35 put spread: Buy the $GME 20240517 45 PUT$  while selling the 35 PUT for a debit, positioning for a move <45 but >35.

At Monday's close, the $GME 20240517 49 CALL$  had a 722.61% implied vol, pricing in a 25% rally to break even.

The $GME 20240517 49 PUT$  had a 662.29% implied vol, pricing a 24% drop from 49 to break even.

In summary: The apes have grown up with independent thoughts, no longer blindly chasing overpriced calls. Bullish flow is waning while bearish is steady. Unless we see a massive resurgence in call buying over the next two sessions, longs likely capitulate this week. And if put buying also accelerates, Friday could get very ugly.

AMC Entertainment (AMC) Tracker

On Monday, AMC options ranked #3 in total trading volume across all stocks/ETFs with 1.79M contracts, up 32.4%. Open interest growth was more balanced: calls +12.7%, puts +34.8%.

Top 3 calls opened:
$AMC 20260116 20 CALL$  +45,045
$AMC 20240621 20 CALL$  +9,746
$AMC 20240621 15 CALL$  +5,500

Wow, buying calls all the way out to 2026 - if you give it enough time the stock is bound to rally, right?

Top 3 puts opened:
$AMC 20240517 5 PUT$  +10,506
$AMC 20240517 6 PUT$  +8,606
$AMC 20240517 3.5 PUT$  +7,726

If GME can't rally, AMC is sure to drop even harder.

Top closing trades:
$AMC 20260116 10 CALL$  -15,272
$AMC 20240517 8 CALL$  -14,612
$AMC 20260116 12 CALL$  -9,235

Highest put closing was just over 1,000 contracts, not notable. Signs of an orderly exit by the momentum chasers.

The $AMC 20240517 7 CALL$  had a 762% implied vol, pricing 25% movement.

The $AMC 20240517 7 PUT$  had a 745% implied vol, pricing 26% movement - in line with GME.

Expect a major implied vol crush across the board today.

# Options Hub

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  • FrankieRed
    thanks for sharing
  • Sonsonkok

    Great article, would you like to share it?

  • KSR
  • Tom Chow