On 2/1 with GME stock at $225 we wrote about how options dealer flows could result in the stock dropping to the $60 strike. We highlighted this strike because it was where the largest concentration of options were placed (from a gamma perspective). You can see that is is precisely what has played out:
This week we look for the stock to hold the $60 area, and for the “pin” to be pulled on Friday. This is because >30% of the gamma position in GME expires at Fridays close. This may mean that downside volatility increases after this day, with <$50 prices in play.
You can see this reflected in our EquityHub snapshot, with the key trading level still at 60, and a large hedging support area at 50. This implies higher downside volatility next week.