Options traders were betting that the video game retailer’s stock could do much better on Friday after more than doubling this week.
The actions of GameStop Corp. have extended their rally to a third day, putting them on the pace of their best week this month amid a wave of day trader activity.
The video game retailer climbed 20% to $ 130 in pre-market trading as amateur investors continued to promote the stock on social media platforms such as Reddit and StockTwits. Over a million shares changed hands today, adding to the 233 million that have been traded in the past two sessions.
“It would be unwise to ignore the power of collective retailing and this is an example of the resurgence of energy either on GME again or through another title,” said Amy Kong, chief executive officer. investments of Barrett Asset Management.
Options traders were betting the stock could do much better on Friday after more than doubling this week. The most active option traded on the stock on Thursday was a contract on GameStop reaching $ 800 on Friday. Some 52,000 contracts changed hands during the session betting on this one-day gain of 636%. The stock was up 15% to $ 125.15 at 7:22 a.m. in New York.
Analysts cited a tweet from activist investor and GameStop board member Ryan Cohen published shortly before the stock began its resurgence on Wednesday, suggesting that Reddit traders might consider the photo of a McDonald’s Corp. ice cream as a cryptic message to resume the purchase. A report from Citron Research suggesting the company is buying Esports Entertainment Group Inc. to move away from its declining retail business provided further catalyst.
“From a top-down perspective, I want to warn that these price spikes continue to signal a foam in certain corners of the market and represent strong deviations from the fundamentals of the company,” Kong said.