GameStop stock is hitting the news cycles after Reddit users made its price soar in 2020 leading to hedge fund short sellers losing billions. Since then, the stock has been a go-to investment for the average Joe who wants to take on the big institutional players. While many made heaps of money, the others entered the trade late making them lose a lot of money.

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The stock soared in price this month and jumped more than 200% in the last 30 days. However, it shed most of its gains and is now up nearly 120% since last month. One such investor, turned an investment of $27,000 into $2 million when GameStop stock’s price skyrocketed in the charts.

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$27,000 Becomes $2 Million in GameStop

Source: Finbold

A mysterious trader in the options market made use of GameStop’s surge and earned $2 million with a $27,000 investment. The trader made a strategic investment by betting $25 worth of call options in GameStop for an expiration date of May 17. Each option was purchased at an average price of $0.21, and the trader invested $27,000 on these contracts.

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In the derivatives market, a call option gives an investor the right to buy a stock at a specified price. In this case, the trader purchased GameStop at $25 before the option expiry on May 17. The condition is that if the price rises above the strike price of $25, the call option begins to increase in value.

The bet paid off significantly as GameStop’s price skyrocketed to $48.75 on May 13, four days before the options expiry. The price of each call option had hit $13 during the same week. This made the investors’ call options swell 6,400% and turned the investment of $27,000 into $2 million. However, while it worked out well for this investor, nine out of 10 people in the options market lost money. It is advised to remain cautious and trade at your own risk.


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