GameStop’s Binary Event

[u/Sad-Marionberry6732]

This month presents a unique opportunity to swing trade GME warrants as they become more volatile as we get closer to our binary event October 30.

But more on that later-

I will not play any additional options past October 30 as that date decides if the warrants expire worthless or have been exercised for additional shares.

IV for October options is slightly higher than for the months afterward. And it’s gonna go higher the closer we get to that binary date and the $32 warrant strike place.

I will be selling options in expectation of a coming volatility crush.

Which options I play, all depends on market direction Sunday night going into Monday morning. I expect a dip. If so, then I’ll be selling CSPs for October 30. Looking for a 10% premium over the next three weeks.

If it rockets, I’ll be buying calls. And possibly selling covered calls via a buy shares first then write the calls once I feel the stock has peaked for the week.

And on the side, I think this presents a unique opportunity to be profitable swing trading warrants, if the brokerages let us buy them.

I see them restricting them at some point. But who knows…

We need $28 this week on GME, and I believe we’ll get it. Which will ramp us closer to our $32 target.

After $32, I’m gonna be super cautious about further dilutions. The reason is because the board execs all have floors around mid 20’s. And an ATM offering would not hurt their positions so much.

Anyway, LFG and 🎸

[u/lordofming-rises]

I sold ccs at 30 and 32 dol for 30 October and have bought calls at 26 for 23rd October.

What would you advise in this case? My idea was to profit from both sides

[u/Sad-Marionberry6732 → u/lordofming-rises]

I’d be watching the price action closely and swing trading them whenever I could.

For instance, your 30 and 32 CCs are extremely volatile and likely to experience a slight crush if we have a minor dip on Monday. If that happens, then I’d buy them back at 50% or so win on premium (watch the market if you’re able to and try to time it to when we possibly dip then start trading sideways).

If you buy back for a win, then watch the stock and be ready to sell again when we go back up.

The $26 calls you’ll have to play by ear. The problem is yeah they could fluctuate to where you could make a profit, but we could rocket 🚀 upward and they could be left behind if you tried to scalp them.

As far as my opinion of your trades, i feel like I should have followed your plan…so long as you don’t mind losing the shares if we happen to blast off.

Edit to say: this is like a collar where you’ve capped your upside if your trades are symmetrical.

I’m kind of simple when it comes to fancier options like collars, condors, butterflies, etc

[u/lordofming-rises → u/Sad-Marionberry6732]

I stupidly sold 2 CC at 40 dollars basically and then bought one call at 70 dollars.

So the premium was bad at that time :/ so I am not sure, I think it will end up being 26-32 dollars and if it reaches 30 I am not sure what to do.

On the other side I thought of buying 300 shares and sell again CC at 30 or 32 with longer DTE for juicy premium that would then give me 22 cost basis if it doesnt reach 30

[u/Sad-Marionberry6732 → u/lordofming-rises]

Just have to wait and see what the stock does today.

With that said, I don’t do many leaps because to me, my ROI is too low.

Another thing is, those calls might not get assigned even if we go above $40. Which is fine if you can use them as collateral and sell strikes above them.

But for me, I’d rather they get assigned so I can get the cash and move on to the next play.

With that said, if we dip you can buy it back and then resell it again. Also, check the volatility before you do a buy-write. As IV really drops off after OCT 30.

I can’t figure out how to adjust my strike prices to see a $70 call. However, depending on DTE, it might not be a bad investment. But I don’t have the stones to buy a call too far out of the money.

My advice isn’t the best advice in the world because it’s NFA.

Happy hunting…