How a GameStop Options Trader Made 4,800% Profit

A GameStop whale turned a $908,000 investment into $44 million in less than a month, according to Unusual Whales.

The trader in question purchased call options on April 24. The contracts gave the investor the option to purchase GameStop stock (GME) at $12 a share when they expired on May 17. The trader purchased 25,330 of these contracts at $0.36, each contract allowing the investor to buy 100 shares of GME at $12 per share. Their initial investment totaled $908,168.

With a contract expiration date of May 17, the trader was likely carefully watching the price of GameStop. For them to spin a profit, they needed the stock to rise above $12. When the futures contracts were purchased in April, GME was trading at $10 per share and would have needed to increase 20% for the trader to realize a gain.

Little more than a week later on May 2, GME was trading at $12. But then only five days before the contract expired, the stock’s value skyrocketed with the apparent return of Roaring Kitty.

Is GameStop Trader Roaring Kitty Actually Back—Or Are We Being Punked?

After years of silence, the apparent return online this week of meme stock influencer Keith Gill, aka Roaring Kitty, has sent stocks and crypto assets affiliated with the streamer’s past exploits soaring—creating millions of dollars in profit for lucky traders out of thin air.  But is Roaring Kitty actually back?  So far, only Gill’s Twitter account has reactivated since Sunday, posting scores of movie clips re-subtitled with finance-related captions—vintage Roaring Kitty. Before this week, the...

On May 13, the meme influencer’s Twitter came alive again, reigniting interest in GameStop’s stock, seeing GME significantly rise in value, and taking related meme coins allong for the ride.

Roaring Kitty was a core figure in the 2021 GameStop short squeeze, an iconic financial event that got a retelling in the movie Netflix move “Dumb Money.”

The impact of Roaring Kitty’s apparent return has been pronounced. GameStop shares closed at $18 on May 10. And by May 14, had risen as high as $65.

Unfortunately for the whale in question, they missed this high. But don’t feel too bad for them. The whale sold their options the next day when the stock peaked around $42. And by selling the options onMay 15, the whale realized a $44 million profit.

These contracts were sold to another investor who will now be able to purchase 20,112,000 shares of GME at $12 a share. If that investor exercised their right to purchase these stocks at $12 and then sold at $40, the price the stock closed last night, they could profit around $550 million.

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Traders who were fortunate enough to have bought in early on the latest meme stock craze are making away with huge gains.  Unusual Whales, which tracks trading data, posted on Twitter the activity of one trader who invested $27,000 in call contracts on April 24 when they were priced at $0.21 a pop.  The contracts then peaked at $13.63, meaning the investment would have reaped gains of 6,400%—turning $27,000 into $2 million, according to the firm.  Holy, this trader turned thousands into million...

However, markets aren’t that simple. The process of acquiring and then trying to sell 20 million GME shares—roughly 7% of 305 million total outstanding shares—introduces extra risk. Once a trader has acquired the GME shares, they’d likely experience some slippage shift that many shares of a highly volatile stock.

That’s likely why the GameStop whale cashed in at $44 million, rather than getting greedy.

Edited by Stacy Elliott.