The GameStop Frenzy: Roaring Kitty or Roaring Piggy?Why chasing the same play twice can lead to a costly mistake.
Remember when GameStop surged 261% in two days a few weeks back? Roaring Kitty, aka Keith Gill, stirred the pot with a cryptic image, making the stock soar. It was a wild ride, but the surge fizzled out soon after. Fast forward to Sunday evening, and Roaring Kitty is back at it again. He posted a green UNO reverse card on X and revealed a $200 million GameStop position. His screenshot showed $5 million in GameStop shares and 120,000 June 21st $20 calls, which he started buying from May 20th to 31st. I've been tracking this activity closely. That's the essence of Hot Money. It’s a massive short-term bet—an all-or-nothing gamble. This caused a frenzy last night, and GameStop shares surged into today’s opening session at $40, a 72% jump from Friday’s close of $23.14. But as soon as the market opened, shares sold off all day, closing at $28. Despite the initial hype, it seems the bloom is off the rose. On May 14th, I wrote: “The buzz around GameStop has meme traders salivating, hoping for a repeat of the past. But today’s conditions are different. A chunk of the stock is held by short sellers, sure, but with changed margin requirements and more stock available, expect a softer sequel rather than a full-blown rerun.” So far, I’m right. There’s speculation that E-Trade might close Roaring Kitty’s account, but that’s just noise. The more pressing question is, where did he get this money? It seems someone is bankrolling this, and we’ll likely find out more in the coming days. So, what’s the trade here? In my opinion, there isn’t one. The move was following the action and selling into today’s surge. This is why you shouldn’t fall in love with a stock or strategy. It’s about focusing on your edge and executing, win or lose. For me, it’s noise—a casino game. Nothing wrong with that if you understand it. But I prefer opportunities where I have an edge, rather than following the herd. As I mentioned a few weeks ago, the market structure in GameStop is different now than in 2021. It’s not going to repeat itself. Here's a trading truth: Bulls make money, bears make money, but pigs get slaughtered. And right now, it seems Roaring Kitty might have turned into Roaring Piggy. Here’s the thing about a lot of traders—they go to the well too many times and smack a gift horse in the mouth. When you get lucky, you know it, take your chips to the window, cash out, and ride off into the sunset. Good trading, and remember – rent's due. Josh Belanger You're currently a free subscriber to Josh Belanger. For the full experience, upgrade your subscription.
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Senin, 03 Juni 2024
The GameStop Frenzy: Roaring Kitty or Roaring Piggy?
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