Keith Gill must now make difficult decisions regarding his GameStop options as Wall Street prepares to strike.

• Keith Gill, the meme stock champion, retained his hold on 5 million GameStop common shares and 120,000 call options.
• If his position is in the money, many suspect that Gill won't have the capital to exercise the options and E-Trade may have to intervene.
• To avoid the drama in a week and a half, Gill could sell his calls early and make a quick profit, but many believe it would be unbecoming of the champion of the stock.

Roaring Kitty may be considering how to handle his large options position that is close to expiration as he watches his favorite shares move erratically.

The GameStop stock champion, whose real name is Keith Gill, has kept his 5 million GameStop common shares and 120,000 call options, as shown in a screenshot he shared Monday evening. The huge options position, which involves 12 million underlying GameStop shares, could be a challenge for Gill to sell or exercise even if the calls turn out to be profitable or "in the money."

The strike price of his call options against GameStop is $20, and the expiration date is June 21. The video game company's shares have increased by approximately 7% this week to around $30 per share. If the stock price surpasses $20 on that Friday, his call position will become profitable, enabling him to exercise the options at $20 each and purchase 12 million additional shares at a discounted price. However, many believe it is unlikely that he has the necessary capital to execute such a move.

To exercise the calls, Gill would need $240 million, which is equivalent to 12 million shares bought at $20 each. Although his last screenshot showed he has $29.4 million in cash in his E-Trade account, he could deposit more money from other undisclosed accounts.

Roaring Kitty informed 600,000 viewers during Friday's live stream that he lacks institutional support, but he left the door open for the possibility of obtaining additional funds.

E-Trade dilemma

If he doesn't have the $240 million to exercise the calls by June 21, his broker E-Trade may have to intervene by liquidating his options prior to expiration.

If the brokerage doesn't close the positions, it may be forced to take action on behalf of the trader, according to CC Lagator, co-founder of Options AI.

The Morgan Stanley-owned E-Trade declined to comment.

E-Trade's client agreement for self-directed accounts allows the brokerage to decline, cancel, or reverse a client's orders or instructions at its discretion without providing any prior notice.

If Gill fails to provide instructions before the expiration date, the broker may sell the contracts that exceed his cash balance or submit a "do not exercise" (DNE) order for the same amount.

Lagator stated that the DNE option would be extremely expensive because it would mark them as zero. He believed they would contact each other soon to ensure he had a plan. They were eager to hear about the outcome until the last minute.

Last week, The Wall Street Journal reported that E-Trade was considering banning Gill from their trading platform due to concerns about potential market manipulation.

Selling early?

It is possible for Gill to profit quickly by selling his calls early, but many believe it is not a good image.

Tony Zhang, chief strategist at OptionsPlay, stated that he believes the public perception of being a manipulator may hinder him from selling, similar to a modern-day pump and dump scheme.

Traders said that if he sold a large amount of stock, it would be easy for market participants to catch wind of it, and his active selling could put downward pressure on the stock, inspiring his legion of retail traders to follow suit.

The Massachusetts securities division is scrutinizing GameStop's options trading activity, while the Securities and Exchange Commission is monitoring it.

Rolling the options

Gill can choose to roll his calls to a later expiration date, which involves exiting the current position and entering a similar one, until 4 p.m. on June 21.

Lagator stated that it's not something one should spend the last hour doing on their laptop. It's too large. If he's in touch with them, it would be in his best interest to collaborate with their risk teams and trading desks, especially if rolling is his plan.

If the stock falls below $20 before the expiration date of the calls held by Gill, the position will be worthless, despite costing him over $60 million to acquire.

'Options 101'

If Gill manages to acquire enough funds to exercise all of his options, he will possess 17 million shares, making him the fourth-largest shareholder in GameStop, following Vanguard, BlackRock, and Ryan Cohen's RC Ventures, according to FactSet.

He could sell his other 5 million shares of GameStop to fund the transaction to exercise the calls, but even then, the stock would need to trade above $48 for him to secure enough money, which is far from its current price.

On Tuesday, Gill shared a meme on X that depicted a banana with the text "Options Basics 101," indicating his struggle with his dilemma.