If you know, you know, but if you don’t, trading options on meme stocks is bad juju.
There is a curse on these stocks. Both GME and AMC are totally broken. They have been ever since this madness kicked off in January. Nothing about either stock’s price movement since 26 Jan 2021 has been normal and with that, the means to measure price movement too. This leaves options traders with reddit and nothing more. It’s absolutely the very essence of what a slot machine is. Not only do you need the right direction, but you need that random, volcanic level of volatility that appears out of thin air without anyone understanding how or why that keeps happening–besides market watch. They still seem to know. They think it’s them “rEdDiT cRoWd” and organizing and pumping it up. My boomer scale explodes every time MarketWatch writes about GME. Anyways, I’ve been trading options for over a year now and till this date, I have yet find another stock out there that has behaved anything like these stocks. Both for the stock itself and options prices.
Also, here are some family friendly facts about GME:
- Completely unresponsive to technical analysis.
- Completely unresponsive to sentiment.
- Randomly responsive to buying pressure.
- Randomly tanks without ANY information either forecasting/supplementing it.
- Randomly launches without ANY information either forecasting/supplementing it (minus Jan 2021 run up).
- Randomly trades-sideways for most of the time with extremely low volume like it never even exists.
- Price movement and behavior is the same for all meme stocks.
- It has a negative beta that pulls heavily from Jan 2021–so hedging purposes aren’t entirely legit.
- Oh, and options pricing is ridiculous.
- The stock is 100% inefficient.
Provided it’s major theory turns out to be true and explodes as a result, well, it will be like this until it does and one can only wonder for how long. People have been trying to measure this for a year now–nothing so far. Until then, the only one’s finding any efficiency are options sellers who have probably paid off their mortgage by now from people thinking “today’s the day” everyday.
Happy Gilmore would be the very essence of who and what this stock is. Everything about Happy Gilmore and what he does totally lines up with this stock’s market inefficiency (ability to be priced properly given information known about it), culture, dysfunction yet also not and random explosiveness.
Disclaimer: This information is only for educational purposes. Do not make any investment decisions based on the information in this article. Do you own due diligence or consult your financial professional before making any investment decision.