[ad_1]
Billionaire tech investor Chamath Palihapitiya told CNBC on Wednesday that he closed his position in GameStop, a day after joining the commercial frenzy around the video game retailer.
He also defended the power of individual investors to compete with Wall Street hedge funds.
The CEO of Social Capital and former Facebook executive tweeted on Tuesday that he bought $ 125,000 in GameStop call options worth $ 115 in February after asking his Twitter followers what to buy. Calls are derivatives that give the buyer the right to buy a stock at a fixed price. The trader makes money when the stock exceeds the strike price. GameStop action opened at $ 354 a share on Wednesday, up more than 1,550% this year alone.
On Wednesday on CNBC’s “Fast Money: Halftime Report”, Palihapitiya said: “I ended up closing my position this morning, and wanted to announce that I am taking all the profits I made plus my original position. – I’m going to take $ 500,000 and I’m going to donate it. “
Palihapitiya dismissed criticism from Wall Street of how individual investors band together on social media – particularly the Wallstreetbets Reddit bulletin board, and bypassing GameStop and a handful of other stocks like the pros – like hypocritical. He said hedge funds try to push stocks all the time.
He said allowing hedge funds to sell 140% of GameStop shares could be seen as irresponsible.
GameStop shares initially surged earlier this month after the company announced that Chewy co-founder Ryan Cohen was joining its board. As buyers entered the stock, shorts were sent running for the hills.
A short squeeze occurs when a stock with a large number of short sellers begins to increase its price and the shorts scramble to buy stocks at the current higher prices to limit their losses. They return the number of shares borrowed and lose the price difference.
Palihapitiya said the phenomenon around GameStop stocks, a few other stocks like AMC Entertainment, is more than just a trading story, arguing that it is establishment pushback.
[ad_2]
Source link