GameStop options bets on another surge are rapidly losing value. Calls with a strike price of $125, nearly 300% above the current price, have seen their prices drop by over 80% in just two weeks. This sharp decline comes despite GameStop’s recent rally, which has lifted its shares about 8%. The original buyers of these options appear to have exited their positions, leaving behind a trail of “lottery tickets” that are largely untradeable due to low liquidity.
The high volume-weighted average price of these options on December 16 is now trading at $0.15, down from over $0.75 just days prior. The option’s time value has not been lifted by GameStop’s recent price gains, indicating that the market believes a major move is unlikely. However, some traders are still holding onto these extremely low-probability bets, hoping to ride out another potential surge.
Source: https://sherwood.news/markets/rivian-rips-higher-as-q4-sales-beat-expectations