By Saqib Iqbal Ahmed
NEW YORK (Reuters) – A well-timed options trade in GameStop yielded a nice profit on Friday after an account belonging to “Roaring Kitty,” a stock influencer and longtime advocate for the video game retailer, posted a cryptic post on the social media platform X.
The post from “Roaring Kitty,” whose real name is Keith Gill, showed an image from the 1999 film “Toy Story 2” that had been edited to superimpose a dog's face onto one of the characters.
This was the first post in more than two months from Gill, whose social media updates are eagerly followed by retail traders and often trigger a rush for the stocks and options he mentions.
GameStop shares jumped as much as 9% on Friday after Gill's announcement, but later reversed the gains and recently rose 4% to $23.39.
A trader appears to have purchased about 10,000 GameStop September 13 call options with a strike price of $22.50 for about $1.74 million, about 18 minutes before Gill's message, which came at 12:00 p.m.
About 20 minutes after the tweet, two blocks of these options, 5,000 contracts each, appear to have been sold for a total of about $2.29 million.
Since there were only 4,300 of these contracts open before Friday, the position that was closed was most likely the same one that had been opened minutes earlier. According to Reuters calculations based on LSEG data, this netted the trader about $550,000, a profit of about 30%.
“That's a lot of short-term options right before the weekend, where the timeframe is not very long and you have to act quickly. That makes it a little bit worse,” said Brent Kochuba, founder of SpotGamma, a financial insights company.
“It will undoubtedly cause surprise,” he said.
Gill did not immediately respond to a request for comment.
In June, he posted a photo of a puppy on the social media platform X, leading to speculation that the post could be a reference to Chewy. Shares rose to a near one-year high following the post. A regulatory filing later showed that Gill had bought a 6.6% stake in Chewy three days before his post.
In July, investors in GameStop dropped a lawsuit accusing Gill, who fueled the meme stock craze of 2021, of defrauding them in a “pump-and-dump” scheme for the video game retailer.
On Friday, Chewy shares rose 1.5% to $26.54, recovering from a nearly 4% decline following Gill's post.
(Reporting by Saqib Iqbal Ahmed; Additional reporting by Suzanne McGee; Writing by Jonathan Oatis)
