A strategically placed trade in GameStop’s (GME.N) options yielded significant profits on Friday after an account linked to “Roaring Kitty,” a prominent advocate and influencer for the video game retailer, made an enigmatic social media post on platform X.
The post by “Roaring Kitty,” real name Keith Gill, featured an edited image from the 1999 movie “Toy Story 2” where a dog’s face was superimposed onto one of the characters.
This marked Gill’s return to posting after a hiatus of over two months, during which his social media activities have typically spurred substantial trading volumes among individual investors in both shares and options of the companies he discusses.
On that Friday, GameStop shares saw a peak increase of 9% following Gill’s post, but gains moderated to 4% later in the day, with shares trading at $23.39.
A trader managed to acquire roughly 10,000 GameStop Sept. 13 call options at a strike price of $22.5 for approximately $1.74 million, just 18 minutes before Gill’s noon post.
Subsequently, about 20 minutes post-tweet, two separate transactions involving these options, each consisting of 5,000 contracts, were sold for a total of approximately $2.29 million.
Given that there were only about 4,300 of these contracts in existence before Friday, it’s highly probable that the position opened shortly before the tweet was the same one being closed, netting the trader a profit of about $550,000 or a 30% return, based on Reuters analysis with LSEG data.
Brent Kochuba, founder of SpotGamma, a financial insights firm, remarked, “Buying such a large amount of short-dated calls right before a weekend, when there’s limited time until expiration, requires a quick market move, which also adds a layer of risk.”
“This will definitely attract attention,” he added.
Gill did not respond immediately to requests for comments.
In a related event in June, Gill posted an image of a puppy on platform X, leading to speculations that it might hint at Chewy (CHWY.N), subsequently driving the stock to nearly a one-year peak. A regulatory disclosure later revealed that Gill had acquired a 6.6% stake in Chewy just three days before his post.
In July, a lawsuit accusing Gill of misleading investors during the 2021 meme stock frenzy by participating in a “pump-and-dump” scheme was dropped by the plaintiffs.
On the same Friday, Chewy’s shares increased by 1.5% to $26.54, recovering from an initial drop of nearly 4% that followed Gill’s post.
