Anushka Basu
3 min read
In This Article:
Analyst who predicted GameStop rally makes bold new stock call originally appeared on TheStreet.
A pseudonymous crypto analyst Kaleo, who refers to his trade moves as a 'degen' investor is making a bullish bet on Riot Platforms (RIOT), a big US Bitcoin miner, in a high-stakes options trade.
On May 28, the trader made a succession of posts that are now going viral. In the post the trader showed off a self-proclaimed "degen experiment," wherein tens of thousands of dollars are funneled into out-of-the-money (OTM) call options — high-risk wagers that Riot's stock will surge to well above current levels.
The core idea? With Bitcoin running and the potential to smash new all-time highs, stocks like Riot may have explosive upside to go with it. "If it does, it moves fast," wrote the trader, referring to previous cycles where Riot surged after Bitcoin entered "price discovery" — trading above its all-time highs.
As of June 9, Riot is trading just above $9.70, and this trader is buying calls with strike prices of $25, $30 and even $35, some of these calls will not expire until January 2026. They only make money if Riot's stock price doubles or more in the next several months.
Risky trade, yet this strategy is catching on. The trader is willing to commit to a total of $75,000 and is adding positions on a daily basis while the stock is under $10. “This could go to zero,” they admitted, “but if it plays out, it could be a 10x.”
They are using examples from the GameStop betting spree of 2021, although they believe Riot is more legitimate because it operates as a real business entity with real fundamentals. Unlike meme stocks, Riot is in the growing Bitcoin mining industry and is correlated to BTC price action, believes the trader.
In early 2021, GameStop (GME) — a then struggling video game retail company— gained notoriety as the subject of viral movement on Reddit's r/WallStreetBets community.
Retail traders began purchasing shares and options on GME to squeeze significant hedge funds that were betting the stock would lose value (a type of trading called short-selling).
As trader buying pressure increased, GameStop's stock price surged from less than $20 to nearly $500 within a week-or-so.
