Keith Gill has some tough choices to make on his GameStop options with Wall Street ready to pounce
What is the current cash balance in Keith Gill's E-Trade account as per his last screenshot?
According to the last screenshot shared by Keith Gill, his E-Trade account had a cash balance of $29.4 million.
What is the strike price and expiration date of Keith Gill's call options against GameStop?
The strike price of Keith Gill's call options against GameStop is $20, and the expiration date is June 21.
What actions might E-Trade take if Gill does not have sufficient funds to exercise his call options as the expiration date approaches?
As the expiration date for Keith Gill's GameStop call options approaches, the potential actions that E-Trade might take if he does not have sufficient funds to exercise them include:
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Liquidating his options: E-Trade could choose to liquidate Gill's options before expiration if they remain in the money and he doesn't close them. This would involve selling the contracts that his cash balance doesn't support.
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Submitting a "do not exercise" (DNE) order: E-Trade could submit a DNE order for the amount of contracts that Gill cannot afford to exercise. However, this option would be costly as it marks the options at zero value.
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Contacting Gill to discuss a plan: E-Trade may reach out to Gill in the days leading up to expiration to ensure he has a plan in place for his options. They may work with him and their risk teams and trading desks to find a solution, such as rolling the options to a further expiration date.
It is important to note that E-Trade's client agreement for self-directed accounts states that the brokerage may decline, cancel, or reverse a client's orders or instructions at its discretion and without notice. Therefore, E-Trade has the authority to intervene and manage Gill's options position if necessary to mitigate risk.