Moving Forward After its Game Over for GME

Moving Forward After its Game Over for GME

Posted On February 2, 2021 3:30 pm

I hope it was fun while it lasted, but it appears that GameStop (GME) and the whole r/WallSreetBets short squeeze plays are played out — running into the reality that there was a finite number of targets and a limited time frame for making this extraordinary gambit work.  

And work it did, beyond anyone’s imagination. My hat’s off to all who got on board early and had the sense to exit last week. Especially yours truly, who laid out the exact gameplan, from the basic math behind the short float, to how to use out-of-the-money calls to inducing delta hedging to predicting the high price almost to the T.  This is the r/WallSreetBets post from early September.  Massive respect. Always Respect the Pump! 

Ok, drifting away from the meme game, let’s go back to the Options360 Service approach of grinding out profits!

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At the start of last week, Options360 had 5 bullish positions that had come under pressure during the recent market dislocation. The focus was making adjustments to reduce cost basis through rolls, or simply paring the positions.  The names included Wal-Mart (WMT) and Morgan Stanley (MS) which have now stabilized, are back in the green with over 60 days left in the trade. 

New trades include Facebook (FB), which started as a bull put spread.  But as shares initially sank, I turned it into an iron condor.  This was a defensive move but I was prepared and told Options360 Members to expect it — from the initial Alert on 1/28. 

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We are establishing a bull put spread (with the flexibility and willingness to turn it into an iron condor) looks attractive

The position is now showing a small profit with time decay working in our favor. 

Today, I added a bull put spread in Visa (V), based on their recent strong earnings report and major support at the $200 level.  

I expect to make more trades in the coming days as the Reddit circus packs up the tents and we can get back to business as usual. 

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About author

Steve Smith

Steve Smith have been involved in all facets of the investment industry in a variety of roles ranging from speculator, educator, manager and advisor. This has taken him from the trading floors of Chicago to hedge funds on Wall Street to the world online. From 1987 to 1996, he served as a market maker at the Chicago Board of Options Exchange (CBOE) and Chicago Board of Trade (CBOT). From 1997 to 2007, he was a Senior Columnist and Managing Editor for TheStreet.com, handling their Option Alert and Short Report newsletters. The Option Alert was awarded the MIN “best business newsletter” in 2006. From 2009 to 2013, Smith was a Senior Columnist and Managing Editor for Minyanville’s OptionSmith newsletter, as well as a Risk Manager Consultant for New Vernon Capital LLC. Smith acted as an advisor to build models and option strategies to reduce portfolio exposure and enhance returns for the four main funds. Since 2015, he has worked for Adam Mesh Trading Group. There, he has managed Options360 and Earning 360, been co-leader of Option Academy, and contributed to The Option Specialist website.