The financial markets are currently witnessing a phenomenon that many believed was a relic of the past: the resurgence of GameStop (GME) as a central focus for high-conviction institutional and retail traders alike. In a move that has sent shockwaves through the investing community, Michael Burry—the legendary contrarian investor famous for "The Big Short"—has officially returned to GME, disclosing a significant new position as of early 2026. |
This endorsement comes at a time when unusual options activity is spiking, including a massive bet on deep out-of-the-money call options expiring in March 2026. With a fortress balance sheet and a CEO pushing for a $100 billion valuation, the question is no longer just about survival, but whether a new "Meme Phase" is about to ignite a historic rally. |
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The Burry Signal: Why the "Big Short" Legend is Long on GameStop |
Michael Burry's return to GameStop is not merely a nostalgic play; it is a calculated bet on tangible value and leadership transformation. Having famously exited his 2019 position just before the 2021 squeeze, Burry recently expressed on his Substack that the company now possesses a unique "optionality" that it lacked in previous years. |
He has noted that the current market cap is often trading near the company's net asset value, essentially providing a floor for his investment while leaving the upside entirely open to Ryan Cohen's strategic pivots. |
Valuation Floor: Burry is targeting entries near 1x tangible book value, which he estimates around $12.49 per share. Capital Reserves: GameStop currently holds approximately $9.35 billion in cash and marketable securities, a staggering increase from its $500 million reserves in 2019. Conviction in Leadership: Burry described his new stake as a bet on "Ryan Cohen for the next 50 years," highlighting rare long-term confidence.
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Unusual Options Activity: A $37 Strike Mystery for March 2026 |
While Burry provides the fundamental foundation, the "smart money" in the options pits is betting on a violent move toward the upside. |
Recent market data has flagged a significant purchase of 1,817 GME call options with a $37.0 strike price, expiring on March 6, 2026, at a premium of $0.38. This specific trade represents a highly leveraged bet that the stock will surge more than 50% from its current levels within the next few weeks, likely timed to coincide with major Q4 earnings announcements and potential corporate catalysts. |
Gamma Squeeze Potential: Large concentrations of out-of-the-money calls can force market makers to hedge by buying the underlying stock. Institutional Footprints: A single purchase of nearly 2,000 contracts often signals institutional repositioning rather than fragmented retail buying. Timing the Catalyst: The March expiration aligns perfectly with GameStop's holiday earnings report and a scheduled shareholder vote on executive compensation.
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Ryan Cohen's $100 Billion Gambit: Transforming the Business Model |
CEO Ryan Cohen has recently unveiled an audacious "Billion-Dollar Gambit" aimed at transforming GameStop into a diversified investment vehicle. His newly approved performance-based compensation plan is tied to reaching a massive $100 billion market valuation, a goal that would require a nearly ten-fold increase in the current share price. |
To achieve this, Cohen is pivoting the company away from its reliance on physical retail and toward high-margin acquisitions and digital asset infrastructure. |
Acquisition Drive: The company is utilizing its $9 billion war chest to target "diamonds in the rough" with sleepy management teams. Efficiency Measures: GameStop has confirmed 470 store closures in early 2026 alone, exiting multiple European markets to prioritize profitable regions. Bitcoin Strategy: With over $519 million in Bitcoin holdings, GME is now one of the largest corporate holders of digital currency, adding a layer of tech-forward volatility.
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Short Interest and the 13-Day "Time Bomb" |
Despite the improved fundamentals, short interest in GameStop remains a critical factor for any potential rally. Recent data indicates that approximately 65.8 million shares are currently sold short, representing nearly 15% of the float. |
Crucially, the "days to cover" ratio has ballooned to 13.0 days, one of the highest in the current market, meaning that if a rally begins, it could take short sellers nearly three weeks of average volume to exit their positions. |
Liquidity Trap: High days-to-cover metrics often lead to "forced buying" as short sellers scramble for shares during price spikes. Institutional Shift: While retail sentiment is high, some institutions have moved from net buying to net selling, creating a battleground between different classes of investors. Inverted Correlation: GME's negative beta of -1.21 suggests it moves inversely to the broader market, making it an attractive "chaos hedge".
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March 2026 Catalysts: The Perfect Storm for a Rally |
The upcoming weeks are packed with events that could serve as the match to light the GME powder keg. Beyond the usual quarterly financial metrics, investors are watching for updates on the Nintendo Switch 2 launch, which is expected to provide a massive tailwind for the hardware cycle in late March 2026. |
Additionally, a special shareholder meeting is scheduled to finalize the details of Cohen's performance award, which could serve as a formal "re-IPO" moment for the brand. |
Q4 Earnings Release: Holiday quarter results often dictate the year's momentum for specialty retailers. Shareholder Vote: Formalizing the $100 billion target could cement investor confidence in Cohen's long-term vision. Hardware Cycle: The release of major new consoles typically triggers a multi-quarter boost in software and accessory sales.
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Final Takeaway |
The 2026 iteration of the GameStop story is fundamentally different from the 2021 mania. While the social media fervor remains, the current rally is supported by a multi-billion dollar balance sheet, profitable quarters, and the backing of one of the world's most disciplined value investors. |
Whether you view GME as a "melting ice cube" or a "coiled spring," the convergence of Burry's entry, Cohen's ambition, and aggressive options activity suggests that the next phase of the GameStop saga is no longer a question of "if," but "when". |
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Disclaimer: This content is for educational purposes only and does not constitute financial advice. Options trading involves risk, and not all trades will be profitable. Always manage risk responsibly. |
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