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Living in a Post-GameStop World

Feb 1, 2021

By: Frank Kaberna

The rivalry between Wall Street and Main Street has inspired everything from works of art to public protests, and the 2021 version of this age-old dichotomy is…(adjusts glasses)...the stock price of a video game retailer?

Recent activity in stocks like GME and AMC has driven many new voices to ring out in the financial markets, which, in turn, has created great volatility and potential opportunity for the everyday trader. This opportunity, as many saw last week, comes with fine print:

 

Single Stocks Can Really Move

At the close of January 28th, GameStop stock was up more than 900% on the year, and this day alone saw the stock both increase by 47% and fall by 68% from the prior day’s close. One share of GME covered a high-to-low range of more than $400 in last Thursday’s trading alone. Small Stocks (SM75) futures, a product that’s more than 30 times the size of a GME share but holds several stocks across multiple sectors, had a $170 high-to-low range on the same day.

Halts and Restrictions

Movement like this, which is more common for a single stock than a diversified stock ETF or future, can cause trade stoppages. As was seen numerous times throughout last week, a stock can trigger a halt after moving many percentages in a short amount of time. Also, many brokerages reserve the right to restrict trading in certain stocks for...their reasons. Finally, pattern day trading rules restrict day trading in accounts under the size of $25,000; this prohibits traders from opening and closing stock positions on the same day.

The opinion of the everyday trader is of paramount importance at the Small Exchange, and we are constantly working to help that trader bring their ideas to execution. Please send any feedback or questions you have for the Small Exchange to newsletters@smallexchange.com.

Stock and Stock Index (GameStop \ GME and Small Stocks \ SM75)

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Source: dxFeed Index Services (https://indexit.dxfeed.com) times in CT (gaps in GME due to halted periods)

 

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Save Every Time You Trade the Smalls

The Small Exchange has also created a limited number of subscriptions for a one-time payment of $100 that give traders a lifetime of reduced exchange and market data fees when trading the Smalls.

For more information on the Small Exchange’s products and subscription service, visit smallexchange.com. And be sure to check out my new show on tastytrade, Small Stakes, where Pete Mulmat and I will show viewers how to navigate Small Exchange products every Monday-Friday and always on demand.

If you’d like to find out where to trade the Smalls products check out the list of brokers that offer their products, or tastytrade’s preferred broker tastyworks.


© 2021 Small Exchange, Inc. All rights reserved. Small Exchange, Inc. is a Designated Contract Market registered with the U.S. Commodity Futures Trading Commission. The information in this advertisement is current as of the date noted, is for informational purposes only, and does not contend to address the financial objectives, situation, or specific needs of any individual investor. Trading futures involves the risk of loss, including the possibility of loss greater than your initial investment.


Options involve risk and are not suitable for all investors. Please read Characteristics and Risks of Standardized Options before deciding to invest in options.

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