Biden economic team "monitoring" GameStop trading activity as volatility continues
Shares of Nokia (NOK) are soaring on Wednesday, although the networking company says it is "not aware of any material, undisclosed corporate developments or material change in its business or affairs." Nokia is not the only stock seeing increasing volatility. This week has seen massive surges higher in some of the most shorted stocks in the market, such as GameStop (GME) and AMC Entertainment (AMC).
NO APPARENT REASON FOR SPIKE: Nokia trading has resumed after being halted earlier on Wednesday following a jump in the shares. Commenting on the recent trading activity of its stock, Nokia said it is "not aware of any material, undisclosed corporate developments or material change in its business or affairs that has not been publicly disclosed that would account for the recent increase in the market price or trading volume of its shares."
OPTION VOLUME: Of note, Tuesday's total option volume of 38.6M contracts resulted in net open interest growth of 6.19M calls and 4.66M puts. Nokia, GameStop, AMD (AMD) and AMC Entertainment saw the greatest growth. Top five new positions opened include puts in ViacomCBS (VIAC), calls in General Electric (GE), calls in Nokia and puts in AMD, according to data from Trade Alert.
SOCIAL MEDIA-DRIVEN FRENZY: Some believe the trading frenzy is due to social media-driven hype. On Monday, KeyBanc analyst Bradley Thomas said he believes the recent outperform in Bed Bath & Beyond (BBBY) shares has been driven by the "attention received from the Reddit message board WallStreetBets," which has been in the spotlight for targeting small cap stocks with high short interest, such as Bed Bath and GameStop.
On Tuesday, Tesla (TSLA) CEO Elon Musk tweeted out a link to the Reddit board that's largely hyped GameStop's stock. Musk's tweet, which linked to the "wallstreetbets" Reddit page that has more than 2 million subscribers, said "Gamestonk!!"
WHAT'S NOTABLE: Amid the volatile trading, Ameritrade has told clients of some restrictions being put on transactions involving GameStop and AMC, according to Bloomberg. Meanwhile, Melvin Capital, the hedge fund targeted by Reddit, closed out its short position in GameStop on Tuesday afternoon after taking a "huge" loss, Gabe Plotkin, the fund's manager, told CNBC's Andrew Ross Sorkin.
Meanwhile, White House Press Secretary Jen Psaki said President Biden's economic team, including Treasury Secretary Janet Yellen, are "monitoring" the trading activity in GameStop. "It's a good reminder, though, that the stock market isn't the only measure of the health of our economy," Psaki added.
PRICE ACTION: In afternoon trading, shares of Nokia have jumped almost 42% to $6.71. Also higher, GameStop has soared over 116% to $320, AMC has advanced about 265% to $18.09, and Bed Bath & Beyond has gained almost 30% to $47.91.