Core Insights - Michael Burry, known for his role in The Big Short, sold his entire GameStop position in late 2020, missing a significant short squeeze in January 2021, which could have resulted in a billion-dollar gain [1][2] - Burry's recent analysis titled "GameStop, The Prequel" discusses a unique market phenomenon involving retail traders and a gamma squeeze [2] - GameStop currently has $8.8 billion in cash and a market cap of $9.9 billion, despite a 27% decline in stock value in 2025 [3] Financial Performance - In fiscal Q3 of 2026, GameStop reported an operating income of $41 million, a significant improvement from a $33 million loss in the previous year, with net income rising from $17 million to $77 million [5] - The company ended Q1 with nearly $9 billion in cash and marketable securities, up from $4.6 billion a year ago [5] - Cost-cutting measures led to a 21% reduction in selling, general, and administrative expenses, decreasing from $282 million to $221 million year-over-year [6] Strategic Changes - GameStop is exiting underperforming international markets, including Canada and France, following previous exits in Germany and Italy, which has improved profitability in remaining locations [7] - The company's business model has been revamped under Ryan Cohen's leadership, with Burry noting that the current situation is similar to his 2018 thesis but with significantly larger numbers [4]

Core Insights - Legendary investor Michael Burry sold his significant position in GameStop Corp. just weeks before the stock's historic rally in January 2021, missing a potential $1 billion profit [1][3]. Group 1: Investment Decisions - Burry's Scion Asset Management held approximately 3 million shares of GameStop with an average cost basis of about $3.32 (pre-split) but exited the position in the fourth quarter of 2020 as the stock reached the mid-teens [3]. - The decision to sell was influenced by skepticism regarding activist investor Ryan Cohen's plans, which Burry deemed to have "execution risk" [3]. - Burry preferred the immediate returns from share buybacks over uncertain digital transformation strategies and faced client withdrawals, prompting the exit [3]. Group 2: Market Dynamics - Burry described the GameStop event as the only "legal market corner" he has ever witnessed, where retail traders executed a "gamma squeeze" by buying large volumes of call options, forcing market makers to buy the underlying stock [4]. - He dismissed the theory that "naked short selling" was the main cause of the volatility, arguing that it was the breakdown of standard synthetic positions that led to panic unwinding by legal short sellers [5]. Group 3: Historical Context - The strategy applied to GameStop was similar to Burry's 2001 investment in Avanti, where he bought undervalued companies, but he admitted to being "blinded" by traditional valuation metrics and failed to anticipate the retail frenzy that transformed GameStop into a global phenomenon [6]. Group 4: Current Performance - GameStop shares have declined 27.95% year-to-date and 24.97% over the past year, with a recent closing price of $22.09, reflecting a 4.05% increase on Monday but a 0.32% decrease in premarket trading on Tuesday [7]. - Benzinga's Edge Stock Rankings indicate that GameStop maintains a weaker price trend across short, medium, and long terms, despite a solid growth ranking [7].

Market Overview - On November 25th, stocks unexpectedly rose despite unfavorable conditions such as a Treasury settlement day, increased overnight funding rates, and a drop in Bitcoin [1][4] - The S&P 500 initially fell by nearly 80 basis points at the open but reversed to finish higher, indicating a mechanical force in the market that overcame tight liquidity conditions [1][4] Volatility Insights - Implied volatility was sold ahead of the holiday trading session, which is a common occurrence due to time decay and reduced trading days [2] - The CBOE VIX decomposition tool indicated that the drop in VIX from November 24 to 25 was primarily driven by mechanical factors rather than fundamentals, with Sticky Strike and Parallel Shift being the largest contributors [6][8] Stock Performance - Meta's stock gained nearly 4% on the day, contributing positively to the index, despite a widening of its credit default swaps (CDS) [11] - NVIDIA's stock fell more than 2% during the session, trading as low as 6% at one point, but this did not prevent the overall market from rising [4] Liquidity and Rates - The overnight repo rate rose to 4.04% from 3.97%, suggesting that the Secured Overnight Financing Rate (SOFR) is likely to increase above 4% in the following days [24] - Significant liquidity pressures are anticipated on the following Friday and Monday, with nearly $130 billion in Treasuries due to settle [24] Company-Specific Developments - SoftBank's stock fell by 10%, erasing all gains made since early September, indicating the end of a previous gamma squeeze [26]

Market Overview - The current market is heavily influenced by a few major tech stocks, particularly in the AI sector, with a notable rebound observed [2][3] - Meta is reported to be flat year-to-date, while Google and Nvidia are highlighted as key players in the market [3] Apple Inc. (AAPL) - Apple is at or near all-time highs, with a focus on retail options order flow driving potential for a gamma squeeze [4][5] - A strategy involving buying 275 calls and selling 285 calls for a $3.50 debit is proposed, targeting a squeeze within the next nine trading sessions [6] - Technical analysis indicates a critical resistance level at 277.32, with potential support levels identified between 255 and 266 [7][8][9] - Apple has shown strong performance, increasing over 11% in the last 30 days [10] Silver ETF (SLV) - The silver ETF SLV has seen a significant rise, but a bearish trade is suggested due to expectations of a pullback after a rapid increase [11][12] - A strategy involving buying a 47 put and selling a 44 put for a $130 debit is proposed, anticipating a short-term pullback [14] - Silver has increased approximately 75% this year, indicating strong market interest [15] Exxon Mobil (XOM) - Exxon Mobil is positioned at the upper edge of a trading range, leading to a bearish outlook [21][22] - A defined risk strategy is suggested, involving buying 115 puts and selling 110 puts for a $90 debit, with expectations for the stock to remain within its historical range [23][24] - Technical analysis shows a choppy trading pattern, with significant levels at 115 and 120, indicating potential resistance and support [25][28][30]

Core Viewpoint - The article discusses the concept of "Doomsday Wheel" in options trading, focusing on the Gamma effect and the strategies for both buyers and sellers in the context of options expiration [6][7][10]. Group 1: Understanding "Doomsday Wheel" - "Doomsday Wheel" refers to the phenomenon where options can dramatically increase in value on expiration day, particularly for at-the-money options due to their high Gamma values [7][10]. - The Gamma effect leads to significant price fluctuations in options as they approach expiration, making them nonlinear derivatives [7][10]. Group 2: Buyer Strategies - Buyers can employ a laddered partial profit-taking strategy, where positions are liquidated in stages (e.g., 50%, 30%, 20%) upon reaching preset profit targets [3][12]. - Another strategy is rolling positions, where as options approach the money, they are closed and new positions are opened at higher strike prices [4][14]. - A spread strategy can also be used, where part of the position is closed and higher strike call options are sold to hedge against potential downturns [5][17]. Group 3: Seller Risk Management - Sellers should focus on timely liquidation of positions once a significant portion of premium has been realized [5][19]. - Position rolling to next month’s deeper out-of-the-money options can help manage risk [5][25]. - Tail risk protection can be achieved by using profits to buy out-of-the-money options to hedge against extreme market movements [5][25]. Group 4: Market Context and Implications - The article highlights the recent focus on carbon lithium options, particularly in the context of the upcoming September expiration and the significant price movements observed [6][20]. - The December 2023 carbon lithium options expiration is noted for its dramatic price increases, emphasizing the importance of risk management for sellers during such volatile periods [21][24].