Skip to main content

Market Overview

Gamestop Short-Selling Nets Bill Gross $10M, Who Says Current Volatility 'Perfect Opportunity For Options Sellers'

Share:
Gamestop Short-Selling Nets Bill Gross $10M, Who Says Current Volatility 'Perfect Opportunity For Options Sellers'

Bill Gross, the co-founder of fixed income investment company Pacific Management Co., said he managed to book a profit of about $10 million from the GameStop Corp. (NYSE: GME) trading frenzy earlier this year.

What Happened: The legendary billionaire investor said in an interview Tuesday on Bloomberg Television that he initially sold call options on GameStop at strike prices of $150 and $200, and lost $10 million as the stock surged amid a rally fueled by retail traders. However, he managed to book a profit of $10 million and exited the trade when the videogame retailer’s shares finally tumbled.

The erstwhile bond king said he is still selling call options on the GameStop stock at $250 and $300, noting that the volatility is super high and is a “perfect opportunity for option sellers, not buyers.”

See Also: GameStop Frenzy Continues To Inspire More Retail Investors' Jump Into Stock Market

Why It Matters: Shares of GameStop and other heavily-shorted stocks such as AMC Entertainment Holdings Inc. (NYSE: AMC) skyrocketed in January as retail traders belonging to the Reddit Investor forum r/WallStreetBets bid up the stocks to create a short squeeze.

GameStop and some other meme stocks such as Rocket Companies Inc. (NYSE: RKT) and AMC Entertainment Holdings continued to see strong retail investor interest even on Tuesday amid speculation small investors will invest funds from upcoming stimulus checks into the equity markets.

Meanwhile, GameStop analyst Curtis Nagle said in a note last week that the company’s shares remain “very detached from fundamentals”. He also said that the recent surge in GameStop’s shares could be due to rising expectations for the company to adopt a digital business model led by major shareholder Ryan Cohen.

See also: How‌ ‌to‌ ‌Buy‌ ‌GameStop‌ ‌(GME)‌ ‌Stock‌

Price Action: GameStop shares closed 5.4% lower on Tuesday at $208.17.

Photo courtesy: EPIC via Wikimedia

 

Related Articles (GME)

View Comments and Join the Discussion!

Posted-In: Bill Gross Reddit Short Squeeze wallstreetbetsNews Short Sellers Media Best of Benzinga

Don't Miss Any Updates!
News Directly in Your Inbox
Subscribe to:
Benzinga Premarket Activity
Get pre-market outlook, mid-day update and after-market roundup emails in your inbox.
Market in 5 Minutes
Everything you need to know about the market - quick & easy.
Fintech Focus
A daily collection of all things fintech, interesting developments and market updates.
SPAC
Everything you need to know about the latest SPAC news.
Thank You

Thank you for subscribing! If you have any questions feel free to call us at 1-877-440-ZING or email us at vipaccounts@benzinga.com