(besides shorting 140% of the float, without which none of this would be possible.)
GME closed Friday, Jan. 22 at $64. The top strike price on Jan. 22 was $40 ? (IIRC), which meant that all those who sold naked calls were then either liquidated or had just discovered they opened a short position. Any covered calls were merely called away.
On Monday the Jan. 29 expiration had a top strike price of $115. The stock quickly elevated to $155 before closing at $76. So, any new, adventuresome (reckless?), naked call sellers at the $115 strike were relieved after a bit of a scare. Shorts were (presumably) happy to cover by buying calls.
Tuesday, Jan. 26 the top strike price was expanded to $200, giving shorts an opportunity to hedge at a much higher price and call covered writers a chance to lock in big gains. The stock closed at $148. Elon Musk tweeted "Gamestonk" after hours and the price soared over $220. Most shorts probably did not sleep well Tuesday evening. With good, reason, because,
on Wednesday, Jan. 27 the stock opened over $300, the top strike on Jan. 29 expiration was expanded to $320. The stock stayed above $300 for most of the day, before closing at $347. After hours the stock dropped to around $300.
Thursday morning, pre-open, the stock is trading close to $500 with over 3 million shares trading hands already. Top strike price is still $320.
Thanks for reading so far, I'm almost to the question!
Open interest on the calls is about 100,000 contracts, across all expirations, down slightly from the day before. These 100,000 contracts represent about 10m shares of GME, all of which I expect to expire in the money. If these are covered calls then they are simply called away. GME has a float of 50m shares, so 10m shares represent 20% of the float.
If they were naked calls, then wouldn't they be forced to cover in the open market?
What is the likelihood that a substantial portion of these 100,000 open call contracts (20% of the float) are naked calls written by shorts who face obliteration on Friday if the contracts expire in the money?