Keith Gill, the meme stock trend setter known as Roaring Kitty, may have sold his recently disclosed options at GameStop amid a surge in trading, market experts speculated.
Gill — who made a surprise return to social media last month after not posting anything online for years — had revealed a sizable GameStop stock and options position in a screenshot on Reddit on June 2.
The screenshot showed he held 120,000 June 21 GameStop call options at $20, bought at $5.6754 per contract or $68.1 million in total.
The screenshot also showed he owned 5 million shares of GameStop worth $115.7 million on June 2.
On Wednesday, about 93,000 of the June call options changed hands, some of them in chunks of 5,000 contracts or more.
Taking into account trading volume on Wednesday, contracts changed hands at an average price of $7.65, according to Trade Alert data.
Many of the trades took place below the bid price, indicating a seller may have been trying to offload contracts, Trade Alert data showed.
“(It looks like he’s closing out the position),” Chris Murphy, co-head of derivatives strategy at Susquehanna International Group, told Reuters.
“While he didn’t finish the foreclosure, he probably has enough money now to exercise the rest if he wants to,” Murphy said.
It is unclear whether Gill was partially behind the massive sale.
The post requested comment from Gill.
Overall, GameStop options volume jumped to 1.2 million contracts on Wednesday, 66% higher than the average daily volume for stock options over the past month, according to Trade Alert data.
Gill’s options position has seen big swings in recent sessions with the value of the options position reaching as high as $341 million before briefly going $7.5 million in the red on Tuesday.
Options market participants have been watching the position closely since Gill discovered them.
“We won’t know for sure until we see the open interest numbers tomorrow morning, but I can’t imagine who else would be doing such big discount selling,” said Steve Sosnick, chief strategist at Interactive Brokers.
Based on their closing price of $6.40 per contract, Gill’s 120,000 contracts would have ended the session worth $76.8 million, about $8.7 million more than when he bought them, according to Reuters calculations.
Shares of GameStop ended the session down 16.5% at $25.46.
Shares are up 45% for the year.
Shares of GameStop were trading before the opening bell Thursday at $25.46 each — meaning its options are on track to be “in the money” by the time they reach their expiration date a week from Friday .
If the stock remains above the $20 strike price, Gill can exercise the options and buy an additional 12 million shares at the same low price.
But Gill apparently lacks the capital to pull off the move as it would require $240 million.
In his most recent screenshot, which included a summary of his position at GameStop, Gill only had $29.4 million in cash in his E-Trade account.
If he cannot find the money to exercise his call options, E-Trade will likely step in and liquidate the options before they expire.
“If they stay in the money and he doesn’t close them, the broker could be forced to take action on his behalf,” CC Lagator, co-founder of brokerage Options AI, told CNBC.
By postal wire