GameStop Whale Nets $44 Million from Options Trade

In a stunning display of market timing, a GameStop whale transformed a $908,000 investment into a colossal $44 million in under a month, reports Unusual Whales. The investor made a significant bet on GameStop by purchasing 25,330 call options on April 24, each at a price of $0.36, granting the ability to buy GameStop shares at $12 each when the options expired on May 17.

The gamble required the price of GameStop (GME) shares to rise above $12 to turn a profit. At the time of purchasing the options, GME was trading at $10 per share, necessitating at least a 20% increase to break even. The investor’s fortunes turned sharply upwards more than a week later, as GME reached $12 by May 2. However, it was the unexpected resurgence of Roaring Kitty—the influential meme stock promoter and central figure in the 2021 GameStop short squeeze depicted in Netflix’s “Dumb Money”—that dramatically shifted the odds in the trader’s favor.

Roaring Kitty’s return to social media on May 13 rekindled interest in GameStop, propelling the stock to close at $18 on May 10 and subsequently spike to $65 by May 14. While the investor did not hold out for the peak, they sold their options on May 15 when the stock hit around $42, netting a $44 million profit.

The subsequent holder of these options, if choosing to exercise them, gains the right to acquire 20,112,000 shares of GME at $12 each. Should they manage to sell these shares at the last night’s closing price of $40, the theoretical profit could reach as high as $550 million. However, the logistics of moving such a large volume of shares—approximately 7% of GameStop’s total outstanding shares—adds significant market risk due to potential price slippage amidst volatility.

This savvy move by the original whale showcases a disciplined trading strategy, opting for a substantial sure profit over the gamble for even higher gains, underscoring the complex dynamics at play in high-stakes trading.