- Bill Gross told Bloomberg TV that he was “back in” the market and betting against GameStop.
- The famous investor made around $US10 ($13) million after January’s GameStop saga.
- He said “super-high” volatility “promotes an ability to make some money.”
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Legendary investor Bill Gross is betting against GameStop stock again after walking away from January’s wild volatility with a tidy $US10 ($13) million.
The retired Pimco co-founder told Bloomberg TV on Tuesday that he is taking a position against GameStop stock by selling contracts called call options.
“The volatility is super high… and that promotes an ability to make some money,” he said.
Gross said he has sold call options with “strike prices” of $US250 ($324) and $US300 ($389), meaning he stands to gain if the stock – currently at $US208.20 ($270) – stays below those levels.
Yet the former Pimco boss, who now manages money for his family and foundation, could lose out if the highly volatile stock rises back to the levels of more than $US300 ($389) seen in January.
Gross revealed to the Citywire Selector podcast in February that he was down between $US10 ($13) million and $US15 ($19) million at one point in the January GameStop saga, when day traders pushed up the price to an intraday high of more than $US480 ($622).
“I was losing millions of dollars and that’s not a good feeling when you go to bed,” he told the podcast.
Yet Gross said he eventually made “maybe $US10 ($13) million” after holding his ground as the stock fell.
He told Bloomberg on Tuesday: “I did manage to overcome my insecurities and hold on and ride it all the way back down in terms of getting out.” He added he’s now “back in, I’m still selling call options at $US250 ($324) and $US300 ($389).”
The seller of a call option promises to sell a stock to the option’s buyer at a certain price within a specific time period. The option seller stands to benefit if the stock falls below the contracted price, known as the strike price.
Gross’s position remains a risky one, however. GameStop stock plunged after the January surge, but has since risen sharply again to more than $US200 ($259).
Yet Gross said he thought the stock’s high volatility “is a perfect opportunity for options sellers, not buyers, to take advantage.”