Description

Interest rates are zero. GME is clearly bubbly. Each new day brings on more craziness and makes casinos look more respectable than the speculative part of the stock market. Now let us use this for our advantage.

Look at the 1/21/2022 GME options. The $1.00 and $.50 put are selling for $.20 and $.10, respectively.

If you believe one of the two following items, then you should sell these options and pocket the ~20% return when they expire worthless in 359 days.

• GME will not go bankrupt over the next year
  • This is debatable – the balance sheet however is in a better position given subsequent events after Q3.
• GME directors/executives will fulfill their fiduciary duty and sell stock into the market making the risk of BK near zero.
  • Already filed a $100 million ATM offering with Q3 earnings. Important that these guys are looking to de-risk their financial position before this madness.
  • More importantly given the short interest I suspect there are numerous funds looking to close out their shorts which makes the demand for a secondary offering substantial.
  • A failure to raise capital will go down as one of the greatest blunders in business history (in my opinion).

All in all you can make >20% return with what I would perceive as fairly low risk over a one year hold.

Major risks - GME BK in the next year

Catalyst

Selling lottery tickets to kids