71 cents and even hitting 200 after hours. Is this a real short squeeze? Is it just a fake out? Is the tendy man coming to deliver? You gains let’s talk about it, Music, as always, remember: i’m, just a dummy with a camera on youtube i’m, not a financial professional – and this is not investing advice after the madness that happened late january and into early february, with gamestop shares shooting up to a pre Market high of 513 before plummeting back down to earth just a few days later, things have been pretty calm and quiet on the gamestop front. Shares have been trading in the 40 to 60 range. For the past couple of weeks, you’ve had congressional hearings with the legend himself: i’m, not a cat, but otherwise it seemed like retail has been left holding the bag. Then today, within the last hour of close, we started seeing a lot of buying volume come in on gamestop. Just look at this chart. Gamestop opened at about 45 per share and he had most of the trading volume in the morning as per usual, and then the volume starts picking up at 11, ‘, pacific or 2’ eastern the price starts pumping and the volume keeps increasing. Then trading got halted twice before market closed keeping many retail traders from both exiting and entering gamestop positions trading, didn’t resume again until after markets closed with only after hours trading going on the stock briefly hit 200 before falling back down to the 130 range let’s jump To future me to see where the stock finished after hours after hours, gamestop closed out 168 dollars and one cent, so the big question: what caused this spike? Obviously it was this cryptic tweet by ryan, cohen, okay, maybe not so.
Last time we had the following combination: over 100 of the available float or the amount of available shares to trade were shorted gamestop had a low float with 54.49 million shares. We had bullish catalysts with ryan cohen and two former chuwi execs joining the board. We had retail mania, helping fuel the ramp up and we had a gamma squeeze so this time around what’s different. Well. As far as we know, short interest is now at around 40 percent, still high for a stock and according to highshort interest.com, the most shorted stock, but far less than what it was previously. Then yesterday gamestop announced their cfo is resigning. They are currently looking for his replacement, someone with the capabilities and qualifications to help accelerate gamestop’s transformation, as they look to shift away from physical towards digital. I think most people who are bullish on gamestop would consider that replacement a good thing, but also not quite the catalyst to cause this sudden buying surge let’s take a look at options flow. This shows us large orders of options, contracts that are being purchased i’m. Looking at this data on tradietix, which is an options, flow platform and i’ll link to it in the description below, if you want to check it out, we have 8.34 million spent on options premium for call contracts expiring this friday, with a strike price of 60, also Expiring, this friday is 5 million of call contract premium with the 50 strike price.
This brings us to the gamma squeeze. I don’t want to over complicate things, but i also don’t want to underexplain things either, but here’s the basics in case you don’t, know a game of squeeze happens when options contracts that were previously out of the money expire in the money. So if you bought a 50 call at the beginning of the week when the stock was at 40 and the price goes up to 50 well, your call is now in the money the party that sold you. That contract is generally a market maker. They provide liquidity in the markets so since they sold you the contract, they need to hedge, this trade, so they don’t lose money. They can do that in this case by buying the underlying stock to mitigate the risk associated with selling you a contract when there are a lot of contracts that all of a sudden become in the money. It’S, possible market makers still need to hedge their risk and then buy shares of the underlying which could contribute to gamestop’s share price going up but implied volatility on gamestop options has been pretty high for the past month. This makes buying contracts expiring this week, a very expensive and b, not as enticing of a yolo play like it may have been a month ago when it happened. In january, you had a perfect storm of wall street bets, buying shares and cheap out of the money. Call options expiring the same day, the market makers continue to hedge, their positions, and the price continues upwards.
It doesn’t really seem like that’s what happened today. So what else has changed? Well, wall street bets over on reddit has now over 9 million members and i’m sure there are plenty of people who are new to trading and maybe looking for the next gamestop trade and well here’s gamestop again, the gamestop surge at the end of the day likely Caused an overload on reddit’s servers as the whole site went down for like 30 minutes or so i’m, not sure if we’ll see the same retail frenzy as before, since a lot of people got burned and lost a lot of money, but anything is possible. We saw roaring kitty or deep in value, make another update on february 19th, showing he doubled down, buying 50 000 more shares of gamestop. He really does like the stock. As for me, i like the stock, but that was last week and wouldn’t explain anything other than providing retail bag holders with a glimmer of hope. Could it be whales and hedge funds squeezing out shorts, who are still in possibly could the short hedge funds have covered up their positions in other ways to make everyone else think they covered sure? Could funds just be running the price up to trap, gamestop bulls in even more before bringing the price back down to earth? Again, i guess so. What i learned from the last short squeeze is that we don’t actually know that much about the inner workings of the market and how big money really operates.
Sometimes retail gets a win, but for the most part we are just pawns in their money making game i’ve. Yet to see an explanation for why gamestop shot up today and i’ve been trying to figure out what’s going on, but i really haven’t been able to come up with much after seeing the shenanigans with the dtcc and their increased capital requirements from brokers. It’S never been more clear that the chips are stacked against retail traders, so many people got left holding the bag on gamestop earlier this month, and i really don’t want to see that again. As for me, once i started seeing the volume come in at the end of the day, i did do a few quick scallops on gamestop for about twenty two hundred dollars in profit. Look how i just sold those one thousand shares at sixty two dollars would have been nice to hold. Obviously, but i had no idea. I did, however, buy four call options expiring this friday with a strike price of two hundred dollars. Sixteen minutes before the market closed. I was planning on just selling them for a quick profit, but since the stock got halted into close i’m holding on to these and i’m not super mad about it. These are currently at 400 percent, but it will all depend on how things open up tomorrow. Now, obviously, i don’t know how things will end up with this, but i know it’s risky i’ve put two thousand six hundred sixty dollars at risk for a pretty juicy potential reward and if things go south, i can exit at a loss and be okay.
If you’re in gamestop, i hope you make money from this bike – i’d love to see this stock moon and for all retail, to walk away with pockets, full attendees, but just know that someone has to be left holding the bag. So you better make sure it’s. Not you just please, be cautious and don’t get greedy. If you’re, not in game, stop and you’re feeling that wave of fomo start to wash over you it’s, okay, it will pass and it’s much better to feel a little bit of fomo than it is to lose. Your rent money or your entire life savings by rushing it into something without really understanding it. The market always provides opportunities and it’s okay to let gamestop pass by. If you do want to get in, please tread lightly. We’Ve seen how volatile gamestop can be do not under any circumstances, risk more than you’re willing to lose because you can’t easily get wrecked and please do your own research first because remember this is not investment advice, so the bottom line, honestly, i don’t know i am Trading gamestop, but only with money, i’m. Okay with losing it’ll, be interesting to see where this goes for the remainder of the week. So if you would do me, a favor hit the thumbs up button on this video to turn it into a rocket sending gamestop to the moon.