To The Moon

Didn't expect so much to happen in one day, it has an atmosphere of heating up the party scene.

The Kitten (GME's Ringleader) Flaunts His Position Again

On June 3rd, Monday's U.S. stock market close, Roaring Kitty "Keith Gill" posted screenshots of his holdings on Reddit for the second consecutive day.

The image showed no change in his stock and option quantities. After GME closed at $28, up 21%, his $21 cost basis stock gained 31.62% and $5.67 cost basis options gained 76%. His total account value reached $289 million.

Unsurprisingly, the comment section was full of riled up retail investors vowing to continue buying calls. I believe Roaring Kitty will keep posting daily to incite more retail buying with the high gains.

As GME's known ringleader, Roaring Kitty has two aims in posting:

1. Show everyone his stock and option positions remain unhedged, boosting retail bullishness.

2. Compare the option vs stock gains to lure retailers into buying out-of-the-money calls to ignite a gamma squeeze.

Unfortunately for now, the new retail money isn't biting - the naive have their naivete's rewards by avoiding out-of-the-money options and just buying shares.

Roaring Kitty is the public face, but who is the behind-the-scenes ringleader?

Others may not know, but GME surely has a hand in it with Roaring Kitty.

Last Friday, GME stated that capitalizing on this month's trading frenzy, the company sold $450 million worth of stock, raising about $933 million at an average price of $20.7 per share.

An old reader on X pointed out that if GME didn't issue shares, Roaring Kitty's option exercises would have exceeded 5.3% ownership requiring SEC filing, but the issuance reduced his stake to 4.84%.

Official Reactions:

In response to Roaring Kitty's open ringleading, his broker eTrade and the SEC have made statements.

Fearing stock manipulation, eTrade is considering "kicking out" Roaring Kitty from their platform, with intense internal discussions on this decision.

eTrade's stance of passing the buck is quite clever. Kicking him out is impossible - a whale client like Roaring Kitty surely has dedicated VIP handling, no broker would jeopardize keeping such a client.

But brokers must posture compliance. If issues arise, they can tell the SEC they were already discussing compliance but procedures weren't completed blah blah blah.

On the SEC side, the Wall Street Journal exclusively reported that Roaring Kitty is under investigation by the Massachusetts Securities Division for individual actions, while the SEC focuses on bullish options trading. Both probes have no conclusions yet.

The bullish options trading is interesting - I doubt the SEC is only looking at the $20 calls. Last week's abnormal afterhours exercises of deep out-of-the-money calls likely requires investigation into who exactly is exercising them, this can't just catch one and let the rest go.

The former SEC chair also issued a warning for Roaring Kitty to bear responsibility for his actions. SEC officials are Wall Street veterans, they're the godfathers of ringleading - Kitty's tricks are kids' play to them.

Financial Titan Enters

Sohu founder and veteran investor Charles Zhang sold $GME 20250117 100.0 CALL$  , shorting volatility. He traded 100 contracts worth $490,000. Zhang rarely closes before expiry, so if GME doesn't hit $100 by the 2025/1/17 expiration, he nets $490,000.

Citron chimed in shorting GME that day too, but the crafty old fox didn't disclose his position, likely considering his 2021 shorting blow-up loss.

Some may wonder why big money loves shorting meme stocks? More accurately, they short volatility (sell calls).

No special reason - it's just the counterparty trade to the ringleaders, shorting volatility is an investment fad. In contrast, lurking bullish is declasse, sharing retailers' side gives institutions hives.

The fact is, meme stocks lack fundamentals - they'll fall back to whence they came. For the wealthy, it's a no-brainer way to earn steady profits. Before this surge, GME hit a low of $9.95, the current pop may partially be engineered to short from higher levels as the stock price was realistically just in the teens without mania.

However, the current public posturing is mostly attention-seeking. The real short sellers are still waiting.

Current Situation Analysis

In my article yesterday, I included an image about fishing. Indeed, who is waiting for the bites?

The answer is both the bulls and bears are waiting for bites.

As the ringleader, Roaring Kitty is heating up the scene. The fish he's angling for include retail and institutional shorts. He wants to lure retail into out-of-the-money calls to drive up volatility and entice volatility shorts to sell calls.

Whether Roaring Kitty is a true stock bull is debatable, but he's certainly a volatility bull.

Institutions and some wealthy retail representing the shorts are waiting for Roaring Kitty to pump the stock higher before shorting volatility from elevated levels.

The current issue is retail remains stubbornly naive, only buying shares instead of out-of-the-money calls.

Institutions know the implosion risk of naked call selling, so they avoid selling the lowest strike calls.

There are simply too few fish biting in this scene, requiring more patience.

There's a view that Roaring Kitty could just cash out now.

But if he cashes out now, I wouldn't respect him, would you?

At first glance, Roaring Kitty made $100 million in two days. But the traceable prep has been ongoing since April 1st - he's just about doubled in two months.

This bull market has seen many doubles, why put on such a spectacle when trading Nvidia offers better odds?

Of course, if nobody really bites, Roaring Kitty could just pump to $40, shake out those entries, then close out for a double and peace out. Who cares about reputation when he keeps the green?