The recent options trading frenzy swirling around Trump Media & Technology (DJT) stock has a new player at the table: the “Bond King” Bill Gross.
Gross is now diving headfirst into this high-stakes game, selling options linked to Donald Trump’s freshly minted media company. His bravado knows no bounds, with Gross showcasing his confidence in this bold move on social media, pointing out the sky-high volatility of these options.
In a show of sheer audacity, Gross has put his money where his mouth is, selling puts and calls set to expire in April. His wager? A bet that the shares will oscillate within the $45 to $95 range, as per a Bloomberg report.
This move by Gross comes on the heels of Trump Media’s at-the-money contracts hitting a record-breaking implied volatility of 250 for the stock’s one-month expiration date, fueling the already raging fire of speculation.
This volatility surge has led to a surge in the price of options contracts, offering sellers like Gross the tempting prospect of hefty premiums. Yet, this enticing opportunity also opens the door to significant paper losses in the face of wild share price fluctuations.
The ardor of Trump’s loyal followers on social media has given wings to Trump Media’s stock, propelling it to soar a staggering 275% year-to-date from DWAC’s prior price.
The soaring price has made Trump Media’s stock the talk of the town, with a plethora of market speculators gambling away on its future. Despite the company’s soaring $9 billion valuation post-blank-check merger, vastly surpassing its meager revenue from the Truth Social platform last year, skeptics question the real value lying beneath the surface.
But the price of standing in opposition to this stock is no laughing matter, with investors staring down the barrel of annual financing costs ranging between 400% and 500% to secure their short positions. This makes Trump Media the costliest US entity to bet against by a mile.
While the stock’s meteoric rise has ignited discussions around its true worth and the hazards of taking a stand against it, one investor, who once championed a ban on short-selling, is now contemplating a wager against Trump Media, labeling it as the “mother of all pump and dump stocks.”
In the midst of this financial rollercoaster, notable economist Peter Schiff has ventured a bold forecast on the potential ascent of Trump Media’s stock and its repercussions on Trump’s financial standing. However, not all voices share this optimistic outlook, with Tesla enthusiast Ross Gerber casting a shadow of doubt on the valuation of the media entity.
Amid the whirlwind of opinions and predictions, the intrigue surrounding Trump Media’s stock continues to capture the imagination of investors, with each move closely watched and speculated upon in the ever-fluctuating world of high-stakes trading.