The phrase “don’t try this at home” was possibly made for times like this.
Bond King and co-founder of Pacific Investment Management Bill Gross said he won $ 10 million at GameStop GME,
shares during the retail frenzy of shares earlier this year, but not before the retired billionaire lost several million dollars.
He explained to Bloomberg Television in an interview on Tuesday how this trade declined. “I came in too early. I came in with options like a good Robin Hood trader, I guess … and I sold calls for around $ 150 and $ 200, ”said Gross, who added that then the shares were up to $ 400.
“I managed to overcome my insecurities and go all the way down in terms of getting out,” Gross said. “I was in the hole about $ 10 million, but I’m about the same amount on the ground.”
A call option is a financial instrument that entitles the holder, but not the obligation to buy an underlying security at a fixed price, known as the strike price, meaning that Gross would have been required to buy the shares at price higher than the one sold when the option was exercised.
Gross said he has still returned to GameStop shares and continues to sell call options at the $ 250- and $ 300-per-share level. If these actions exceed these levels, the billionaire could lose money again. “Volatility is very high and that favors the ability to make money,” he said.
In fact, GameStop shares have been the target of short sellers this year, battling in part against individual investors organized by Reddit’s WallStreetBets crowds. The drama has sparked an investigation in Congress, which continues Wednesday, about GameStop’s short compression, AMC Entertainment AMC,
and other actions.
Read: GameStop round 2? As an option buying frenzy it provides another shock to meme stocks
Shares of GameStop started at $ 18 a year, rose to more than $ 300 in late January, peaked, dropped to $ 40, and more recently rose again to $ 200. Shares have risen more than 1,000% to date, but this week alone they have lost 21%.
Gross retired from his post-PIMCO concert as portfolio manager at Janus Henderson in 2019 and is now focusing on managing his charity.
Once at the helm of the world’s largest bond fund, Gross also told Bloomberg he was betting on US Treasury bonds and said he expects inflation not to fall below 2% in the coming months, but to die. more than 3% to 4%. 10-year Treasurys performance TMUBMUSD10Y,
they have risen to levels not seen in more than a year as investors expect strong economic reopenings in the U.S., driven by vaccines.
The call for gross inflation with analysts claiming that part of the inflation rise that will occur this year was due to so-called base effects, when the weaker months of inflation were removed from annual measures as the year passed. time, which led to mechanically higher price levels. .
This phenomenon will take effect in the coming months, when the deflationary effect of the coronavirus pandemic last year is removed from the annual inflation measures reported by the U.S. Department of Labor.
Sunny Oh contributed to this report.