What we know: Archegos went under in 2021 because of their GME short position. That basket of swaps was passed on to Credit Suisse, who then collapsed in 2023, and has since been absorbed by Swiss banking behemoth UBS. So now UBS is in the hot seat. They're a "too big to fail" and the Swiss gov is sweating bullets.
We also know: Someone with deep pockets has been spending tens of millions of dollars the past few days, buying GME $20 call options with a June 21 expiration. There are 485k call option contracts (48.5 million shares) with expiration dates ranging from May 31 to July 19.
What we also know: GME executed an ATM 45 million share offering Friday. We don't know if those shares were sold on the open market, or sold in a private deal, to an undisclosed buyer.
Here's the speculative part, so grain of salt, etc: Supposedly, a UBS trader claims that UBS is the buyer for "more than 2/3" of those 485k contracts, and they're going to exercise them, to buy their way out of the Archegos>Credit Suisse>UBS black hole. He states that buying that many shares would put UBS above the SEC's insider limit of 10% ownership, so that's why GME issued the 45m share offering today, in a friendly deal, to increase the float just enough so that UBS can skirt under the 10% rule.
If this speculation is true, then what? Hard to say, but consider that UBS is just one of many big money players holding a GME toxic short position, and the MOASS thesis has always been that whoever acts quickly and gets out first (buys enough shares to close their short position) can survive. It will cost them greatly, but they can survive, while most of the rest are then screwed. Imagine Musical Chairs, but UBS wipes out most of the chairs in one fell swoop, in the first go around, and all the other players are left without a seat.
What that scenario could mean for shareholders: The large buys by UBS would raise the share price, which would then put the current (huge) option chain ITM (in the money) which would trigger a cascading series of higher price jumps (like going up stair steps) as each higher strike price then becomes ITM. And all this is very conveniently timed, because CAT (Consolidated Audit Trail) oversight goes into effect on May 31.
There's no way to know yet if this UBS rumor is legit, but from what's been happening the over the past few days it does seem very plausible, and if it's legit then we will know soon.
If someone is manufacturing call options when they do not own the shares directly, and the options are in the money, then they are screwed. They have to go to the marketplace, buy actual shares, driving up the price even higher...
If the banks are doing this, they are screwed doubly so, as they still have naked shorts they need to cover. Unless they had some form of a guarantee that the options will never ever be in the money... in which case there is massive fraud and cheating going on and heads will roll.
Call options are a zero sum market. The options themselves can always be sold back into the market. If the holder waits until the expiration date, and the options are in the money, than they will have to by the stock at the strike price and sell the stock back into the market. If the holder is out of the money, the options expire worthless.