markets

Luke Kawa1/3/25

The Hail Mary options bets on another GameStop mania are getting crushed

The lottery-ticket bets looking for another round of intense speculative fervor in GameStop by midway through this month have turned to ashes.

For the January 17 expiry, which is just 14 days away, the most popular option by far are calls with a strike price of $125 — that is, nearly 300% above its current price.

A series of large wagers on another frenzy were made via these call options on December 16, with lopsided options activity that was eerily similar to what preceded the embattled video game and collectibles retailer’s parabolic move higher in the second quarter of 2024. Since that session, even as GameStop shares have rallied about 8% (while the S&P 500 has given back more than 2%), the price of those options contracts has cratered.

On December 16, those options ended the day at $1 with a volume-weighted average price of a little more than $0.75. They’re now trading at $0.15 — 80% below that volume-weighted average price. The nice bump in the stock has been nowhere near robust enough to lift the options as their time value decays.

The open interest has edged higher over this period alongside elevated trading activity in the contract. Volumes were particularly elevated at year-end, with most transactions taking place on the bid side, indicating a motivated seller. So, while the original buyer may have exited the position, there’s still a lot of seemingly extremely low-probability lottery tickets floating around out there.

To quote a track from Light Sweet Crude, “No matter how low you get, you can always go down another 100%.”

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Of the at least 17 analysts that gave a rating on Tuesday, all but one gave it a “buy” or “outperform” rating. MoffettNathanson was "neutral."

The ratings come as SpaceX joined the Nasdaq 100 index, a benchmark tech-heavy basket of companies that underpins millions of portfolios. The inclusion adds built-in demand for the stock from index funds and ETFs.

Still, SpaceX fell more than 5% on Tuesday amid a broader sell-off, and is currently effectively flat from its opening price of $150 a share.

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Nike sinks to lowest level since 2014 after warning of “challenged” sales environment in Q4 report

Did Nike do it?

Investors had a mixed reaction after the global sports apparel company reported its fourth quarter earnings on Tuesday after the bell. Shares initially rose 5% as Nike beat out Wall Street expectations amid a hefty tariff refund bonus. However, the stock then sank to its lowest level since August 2014 in postmarket trading.

Here are the Q4 numbers:

Revenue of $11.0 billion (estimate: $10.8 billion).
Adjusted earnings per share of $0.20 (estimate: $0.12).

Ahead of this report, Nike warned that results would be flattered by a one-time tariff refund (now estimated at roughly $0.52 per share for the bottom line). That gave the company an extra cushion in snapping its streak of seven quarters of year-over-year profit declines.

Over the past year, the company had been punished by tariffs on imported goods, stagnant consumer spending, and increasing competition from other footwear brands like New Balance, Adidas, and Hoka.

Outgoing CFO Matthew Friend deemed it an “increasingly challenging operating environment, where sell-through remains challenged.”

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