Is Gamestop Stock Squeezing Again??

In this video we're talking about AMC.

Wait, no. We're talking about GameStop. Time for another squeeze? Let me know your thoughts in the comments below the video!

Round 2?

Well, well, well. Here we are again talking about GameStop. The stock price rocketed 104% today, closing at $91.71 and even hitting $200 after hours. Is this the real short squeeze? Is it a fakeout? Is it the Tendieman coming to deliver you gains? Let’s get into it.

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 into early February with GameStop shares rocketing up to a pre-market high of $513 before plummeting back down to earth a few days later, things have been pretty calm and quiet on the GME front. Shares have been trading in the $40-60 range for the past couple of weeks.

You’ve had congressional hearings with the legend himself…

But otherwise, it seems 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. GameStop opened at about $45 per share. You had the most action in the morning as per usual.

And then, volume starts picking up at 11:39 Pacific, or 2:39 Eastern. The price starts pumping and the volume keeps increasing. Then, trading got halted twice, before market close… keeping many retail traders from both exiting and entering GameStop positions. Trading didn’t resume again until after the markets closed, with after-hours only trading. The stock briefly hit $200 before falling back down to the $130 range. After hours, GameStop closed at $168.01

So, the big question: what caused this huge spike?

Obviously, it was this cryptic tweet by Ryan Cohen.

Okay, maybe not.

Well, 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 Chewy execs joining the board

We had retail mania helping fuel the ramp up.

We had a gamma squeeze.

So this time around, what’s different? Well, as far as we know, short interest is now at 40%, still high for a stock – and according to highshortinterest.com, the most-shorted stock, but far less than what it was previously.

Then yesterday, GameStop announced their CFO is resigning. They are looking for his replacement, someone “with the capabilities and qualifications to help accelerate GameStop’s transformation,” as they look to shift away from physical toward 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 Tradytics, which is an options flow platform.

We have 8.34 million spent on options premium for calls contracts expiring this Friday with a strike price of $60. Also, expiring this Friday is 5 million of call contract premium with a $50 strike price.

This brings us to the gamma squeeze. I don’t want to over-complicate things, but I don’t want to under-explain things either. Here’s the basics in case you don’t know.

A gamma 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, 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.

They can do that in this case by buying the underlying stock to mitigate the risk associated with selling you a call 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 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 WallStreetBets 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 what happened here today.

What else has changed? Well, WallStreetBets has over 9 million members, and I’m sure there are plenty of people who are new to trading and may be looking for the next GameStop and, well, here’s GameStop again. This GameStop surge at the end of today likely caused an overload on Reddit’s servers as the whole site went down for about 30 minutes or so.

I’m not sure if we’ll see the same retail frenzy as before, since a lot of people did get burnt this first time around… but anything is possible.

We saw Roaring Kitty, or DeepFugginValue, make another update on February 19th, showing he doubled down, buying 50,000 more shares of GameStop. He really does like the stock.

But that was last week… and wouldn’t really explain anything other than providing retail bagholders with a glimmer of hope.

Could it be whales and hedge funds squeezing other shorts who are still in? Possibly.

Could the short hedge funds have covered up their position 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 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 have yet to see an explanation for why GameStop shot up today, and I’ve been trying to figure out what’s going, but I 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 a few quick scalps on GameStop for about $2200 in profit… Look in the video how I just sold those $1,000 shares at $62. Would’ve been nice to hold, but who could’ve known. I did buy 4 call contracts expiring this Friday with a strike price of $200 16 minutes before the market closed. I was planning on just selling them for a quick profit, but since the stock got halted, I’m holding onto these and I’m not mad about it. These are currently up 400%, but it will all depend on how things open tomorrow.

I don’t know how this will end up, but I know it’s risky. I’ve put $2,660 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 spike. I’d love to see this stock moon and for all of retail to walk away with pockets full of tendies, 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 GameStop and feeling that wave of FOMO 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 into something without 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 easily get rekt.

So the bottom line: uhh I actually 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. Do me a favor and hit the thumbs up button on this video to turn it into a rocket sending GameStop to the moon. Consider subscribing if you haven’t already, and I will see you in the next one.