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GameStop Surge Rides On; Chamath Palihapitiya Tweets Call Option Purchase

Billionaire investor Chamath Palihapitiya said Tuesday that he had purchased February call options on GameStop amid the stock's controversial Wall Street surge.

GameStop Corp.  (GME) - Get GameStop Corp. Class A Report shares surged higher Tuesday, following several volatility halts on the New York Stock Exchange, after billionaire investor Chamath Palihapitiya joined the fray in chasing Wall Street's hottest stock.

Palihapitiya, the CEO of Social Capital and part-owner of the Golden Sate Warriors basketball franchise, said he had purchased call options that would allow him to purchase GameStop at $115 a share in February, just as shares in the world's biggest video game retailer were changing hands at $93.70 per share.

A call option gives the buyer the right, but not the obligation, to purchase an asset at a certain price at a specified point in time. 

The stock has  been on one of the wildest rides in Wall Street memory over the past two weeks, rising to as high as $159 per share Monday amid a massive surge in retail investor volume and the capitulation of a high-profile short-seller, Citron Research, late last week.

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Short sellers, in fact, have lost as much as $5.05 billion betting against GamesStop shares so far this year, according to S3 Partners, including nearly $900 million during this morning's session. 

GameStop shares closed 92.7% higher on the session at $147.98 each on the NYSE, pegging the group's market value at just over $10.3 billion. The shares were marked 46.6% higher in after-hours trading, indicating a Wednesday opening bell price of $217.00 each. 

GameStop shares have rocketed more than 400% since January 12, when the group reached an agreement with one of its key investors, Ryan Cohen of RC Ventures LLC and the founder of Chewy Inc  (CHWY) - Get Chewy, Inc. Class A Report, to re-structure its board and focus on digital sales and not simply "remain a videogame retailer that overprioritizes its brick-and-mortar footprint and stumbles around the online ecosystem." 

Powering the surge was an army of retail investors, many of which appeared to co-ordinate their moves in various on-line chat rooms in an effort to 'squeeze' the short-selling Citron Research, which bet against GameStop shares on January 19. 

The shares touched an all-time high of $159.18 during a wild Monday session that gave the world's biggest video game retailer a market value of $10.5 billion.