Shares of Grapevine-based GameStop continued their rush Wednesday, doubling as traders continue to buy out-of-the-money options in the video game retailer, forcing the market makers who sold the options to buy the underlying shares to cover their bets.
GameStop shares, which closed Monday at $147.98 on the New York Stock Exchange, doubled early Wednesday and were trading at about $320 at midday. They were trading at $17.25 on Jan. 4. The company now has a $21.12 billion market value.
From the New York Times Wednesday:
What’s happening: Traders on the Reddit message board, WallStreetBets, a community known for irreverent market discussions, made GameStock their cause du jour and rushed to buy out-of-the-money GameStop options. (A sample comment on the board: “PUT YOUR LIFTOFF DIAPERS ON ITS ABOUT TO START.”) Both Elon Musk and Chamath Palihapitiya also egged on the crowd via Twitter. The frenzy has forced market makers who sold the options to buy the underlying shares to hedge their risk. As more traders snap up options, the brokers have to buy up more shares. That’s driving the astounding rise in the company’s stock price.