Keith Gill, the meme stock trend-setter known as Roaring Kitty, may have sold off his recently-disclosed options in GameStop amid a surge in trading, market experts speculated.
Gill — who made a surprise comeback to social media last month after not posting anything online in years — had disclosed a sizeable GameStop stock and options position in a screen shot on Reddit on June 2.
The screen shot showed he held 120,000 GameStop June 21 call options at a strike price of $20, bought at $5.6754 per contract or $68.1 million in all.
The screen shot also showed he owned 5 million GameStop shares worth $115.7 million on June 2.
On Wednesday, some 93,000 of the June call options changed hands, some of it in large chunks of 5,000 contracts or more.
Taking into account the volume of trading on Wednesday, the 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 that a seller may have been trying to offload the contracts, Trade Alert data showed.
“(It) looks like he is closing the position,” Chris Murphy, co-head of derivatives strategy at Susquehanna International Group, told Reuters.
“While he did not finish closing he probably has enough cash now to exercise the rest if he wanted to,” Murphy said.
It is unclear if Gill was partially behind the massive sell-off.
The Post has sought comment from Gill.
Overall, GameStop options volume jumped to 1.2 million contracts on Wednesday, 66% higher than the average daily volume for the stock’s options over the last month, according to Trade Alert data.
Gill’s options position has seen big gyrations in recent sessions with the value of the options position jumping 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 disclosed them.
“We won’t know for sure until we see the open interest figures tomorrow morning, but I can’t imagine who else would pound out such huge sales at discounts,” said Steve Sosnick, Interactive Brokers’ chief strategist.
Based on their closing price of $6.40 a contract, Gill’s 120,000 contracts would have finished the session valued at $76.8 million, up some $8.7 million from when he bought them, according to Reuters calculations.
GameStop shares finished the session down 16.5% at $25.46.
The shares are up 45% for the year.
Shares of GameStop were trading before the opening bell on Thursday at $25.46 apiece — meaning that his options are on track to be “in the money” by the time they reach the expiration date a week from Friday.
If the stock remains above the $20 strike price, Gill could 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 since it would require $240 million.
In his most recent screenshot which included a rundown of his GameStop position, Gill had just $29.4 million in cash in his E-Trade account.
If he can’t come up with the money to exercise his call options, E-Trade would likely intervene and liquidate the options before they expire.
“If they remain in the money and he doesn’t close them, the brokerage may be forced to take action on his behalf,” CC Lagator, co-founder of brokerage Options AI, told CNBC.
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