GameStop’s rocket-fuelled trading this month, which has taken the stock’s gain in 2021 to almost 1,800 per cent, is a vivid example of how a new army of day traders have “weaponised” financial derivatives to their advantage.
The game retailer’s stock had catapulted 135 per cent by midday trading in New York on Wednesday, to $353, extending a recent spree of gains that sent it zooming higher from its 2020 closing price below $19 a share.
One user with the moniker DeepFuckingValue on the popular Reddit forum WallStreetBets posted screenshots on Tuesday showing how he had turned about $50,000 worth of GameStop call options — which give the holder a right to buy a stock at a certain price, and function much like a leveraged bet — into nearly $23m this year.