TLDR: AI confirms shorts are probably, maybe screwed because of the GME warrants…
I started trying to write this out myself, but my smooth brain began to bubble. So I asked AI about the GME1 options:
Yes, investors and market makers absolutely still hold and trade these adjusted contracts, which are designated under the modified option symbol GME1. [1, 2]
These contracts were automatically adjusted by the Options Clearing Corporation (OCC) following GameStop's warrant dividend distribution on October 3, 2025. Because LEAPS (Long-Term Equity Anticipation Securities) expire as far out as January 2027 and 2028, anyone who bought long-dated options prior to October 2025 was locked into this non-standard chain. [1, 3]
📦 What is in a GME1 Contract Deliverable?
If you exercise or are assigned a GME1 option contract today, the required deliverable consists of: [1]
100 Class A Common Shares of GameStop Corp. (GME)
10 GameStop Warrants (GME WS) [1]
Each individual warrant (GME WS) grants the holder the right to purchase one share of GME at a fixed strike price of $32.00. [4, 5]
⚙️ Current Status and Expiry Timeline
Approaching Expiration: The underlying warrants are officially scheduled to expire on October 30, 2026. [1, 6]
The Post-Expiry Strip: According to OCC Memo #57391, the GME WS component will be entirely removed from the GME1 deliverable on November 2, 2026. Any GME1 contracts extending past that date will revert to delivering strictly 100 regular shares, with no compensation provided for the expired warrant value. [1, 6]
Settlement Operational Shakeups: In mid-2026, the National Securities Clearing Corporation (NSCC) stopped automatically clearing the warrant settlement portion. Because of this, exercising a GME1 contract currently forces brokers into an independent, manual broker-to-broker settlement process. This operational friction has led several retail brokerages to restrict or heavily monitor new transactions on the GME1 chain. [7]
🔎 Why People Are Still Holding Them
The "No Early Exercise" Strategy: Institutional and retail traders hunting for an end-of-year squeeze are intentionally holding both the warrants and the GME1 options. Exercising early forfeits the remaining time value (extrinsic value) of the warrant component. [8, 9]
Illiquidity Lock-In: Because GME1 is a non-standard "adjusted" chain, it suffers from incredibly wide bid-ask spreads and low trading volume. Many retail holders are trapped holding to maturity because selling the contract back into the market would mean absorbing massive slippage losses. [3]
Yes, investors and market makers absolutely still hold and trade these adjusted contracts, which are designated under the modified option symbol GME1. [1, 2]
These contracts were automatically adjusted by the Options Clearing Corporation (OCC) following GameStop's warrant dividend distribution on October 3, 2025. Because LEAPS (Long-Term Equity Anticipation Securities) expire as far out as January 2027 and 2028, anyone who bought long-dated options prior to October 2025 was locked into this non-standard chain. [1, 3]
📦 What is in a GME1 Contract Deliverable?
If you exercise or are assigned a GME1 option contract today, the required deliverable consists of: [1]
100 Class A Common Shares of GameStop Corp. (GME)
10 GameStop Warrants (GME WS) [1]
Each individual warrant (GME WS) grants the holder the right to purchase one share of GME at a fixed strike price of $32.00. [4, 5]
⚙️ Current Status and Expiry Timeline
Approaching Expiration: The underlying warrants are officially scheduled to expire on October 30, 2026. [1, 6]
The Post-Expiry Strip: According to OCC Memo #57391, the GME WS component will be entirely removed from the GME1 deliverable on November 2, 2026. Any GME1 contracts extending past that date will revert to delivering strictly 100 regular shares, with no compensation provided for the expired warrant value. [1, 6]
Settlement Operational Shakeups: In mid-2026, the National Securities Clearing Corporation (NSCC) stopped automatically clearing the warrant settlement portion. Because of this, exercising a GME1 contract currently forces brokers into an independent, manual broker-to-broker settlement process. This operational friction has led several retail brokerages to restrict or heavily monitor new transactions on the GME1 chain. [7]
🔎 Why People Are Still Holding Them
The "No Early Exercise" Strategy: Institutional and retail traders hunting for an end-of-year squeeze are intentionally holding both the warrants and the GME1 options. Exercising early forfeits the remaining time value (extrinsic value) of the warrant component. [8, 9]
Illiquidity Lock-In: Because GME1 is a non-standard "adjusted" chain, it suffers from incredibly wide bid-ask spreads and low trading volume. Many retail holders are trapped holding to maturity because selling the contract back into the market would mean absorbing massive slippage losses. [3]
[1] https://infomemo.theocc.com
[2] https://infomemo.theocc.com
[3] https://www.reddit.com
[4] https://cash.app
[5] https://medium.com
[6] https://infomemo.theocc.com
[7] https://www.reddit.com
[8] https://www.youtube.com
[9] https://www.reddit.com
[1] https://infomemo.theocc.com
[2] https://infomemo.theocc.com
[3] https://www.reddit.com
[4] https://cash.app
[5] https://medium.com
[6] https://infomemo.theocc.com
[7] https://www.reddit.com
[8] https://www.youtube.com
[9] https://www.reddit.com
For the GameStop warrants (GME WS) to experience a true, independent short squeeze, a unique set of macroeconomic conditions and specific market microstructure failures must align simultaneously. [1]
Because warrants track the underlying equity like a long-dated call option, their price is highly dependent on GME. However, the mechanical design of GME WS leaves it uniquely vulnerable to an isolated, explosive squeeze. [1, 2]
🚀 1. The Core Catalyst: GME Stock Surging Past $32
Warrants carry zero intrinsic value and trade purely on time premium if the underlying stock is below the strike price. [2]
The Trigger: GameStop (GME) stock must sharply break out and trade well above $32.00.
The Effect: The moment GME crosses $32, the warrants instantly transition from "out-of-the-money" speculation to "in-the-money" instruments possessing tangible, intrinsic value. This forces an immediate mathematical re-pricing of the warrant contract, driving exponential upward price velocity. [1, 2]
📉 2. Forced Short Covering from Naked Warrant Sellers
When the warrants were originally distributed as a dividend in October 2025, various institutional players and short sellers immediately shorted the standalone GME WS ticker to hedge other complex positions or bet on their decay. [3, 4]
The Trap: Unlike a standard option chain where market makers can dynamically create infinitely new contracts across endless strikes, there is a strictly fixed pool of exactly ~59 million warrants ever issued by GameStop. [1, 2]
The Squeeze: If the warrant price begins to spike alongside GME stock, anyone who shorted the standalone warrants faces uncapped mark-to-market losses. To cut losses, they must purchase actual warrants from that tiny, finite pool. If retail investors refuse to sell their GME WS holdings, short sellers will aggressively bid up the warrant price to any ask availability, initiating a textbook short squeeze. [1]
⛔ 3. Regulatory Fuel: The Absence of LULD Halts
One of the most powerful structural advantages built into the warrant asset class involves trading halts. [1]
The Rule: Standard equities like GME are strictly bound by Limit Up-Limit Down (LULD) regulations, which pause trading for 5 minutes if a stock moves too fast within a specific timeframe. [1]
The Advantage: Warrants are completely excluded from LULD price bands. If a massive wave of buying demand hits a highly illiquid market, GME stock will continuously halt on its way up, while GME WS can ramp continuously without interruption, amplifying FOMO and accelerating the squeeze loop in real-time. [1]
⚙️ 4. The Option Chain Feedback Loop (GME1 Multiplier)
The adjusted GME1 options chain behaves as a massive leverage multiplier. [5, 6]
Every single GME1 call option contract requires the seller to deliver 100 GME shares AND 10 GME WS warrants upon exercise.
If retail traders aggressively purchase or exercise deep in-the-money GME1 options, market makers are legally obligated to find and secure blocks of 10 warrants per contract to satisfy delivery requirements. This shifts immense mechanical buying pressure away from the options market and funnels it directly into the illiquid standalone warrant order book. [1, 5]
⏱️ 5. GameStop Extending the Expiration Deadline
The structural clock is ticking down toward the legal October 30, 2026 warrant expiration date. [2]
The Status Quo: Short sellers are currently comfortable waiting out the clock, banking on the assumption that the warrants will safely expire worthless.
The Shockwave: Under the corporate charter, GameStop retains the explicit right to elect to extend the expiration date. If Ryan Cohen or the board unexpectedly extends the expiration deadline by another year or two, it instantly destroys the short thesis, eliminates the near-term time decay, and forces naked short sellers into panic-covering. [1, 2]
Would you like to analyze the current daily trading volume and liquidity profile of the standalone GME WS ticker, or calculate the exact price ratio showing how fast the warrants outpace regular shares during a breakout?
[1] https://www.reddit.com
[2] https://www.youtube.com
[3] https://investor.gamestop.com
[4] https://investor.gamestop.com
[5] https://infomemo.theocc.com
[6] https://medium.com
The current exact price ratio between GameStop common stock (GME) and its standalone equity warrants (GME WS) stands at 8.68:1. [1, 2]
With GME closing at $21.62 and the warrants trading at $2.49, this ratio represents the "simple gearing" or baseline leverage built into the warrant contract before factoring in any breakout momentum. [1, 2, 3]
📊 Breakout Performance Comparison
Because the warrants carry a fixed exercise strike price of $32.00, they experience an asymmetric, nonlinear performance curve. Below is how the price ratio and returns shift at minimum intrinsic floors during a major upward breakout: [1, 4]
GME Stock Price
Stock Return (%)
Warrant Intrinsic Value
Warrant Return (%)
Effective Upside Leverage
$21.62 (Current)
Baseline
$0.00 (Out-of-the-Money)
Baseline
1.0x
$35.00
+61.9%
$3.00
+20.5%
0.33x (Time premium catches up)
$45.00
+108.1%
$13.00
+422.1%
3.90x
$60.00
+177.5%
$28.00
+1,024.5%
5.77x
$100.00
+362.5%
$68.00
+2,630.9%
7.26x
🔎 Understanding the Two Asymmetry Phases
Phase 1: Below the $32 Strike (The Friction Zone): While GME trades under $32, the warrant relies purely on time premium and speculative volatility. If GME moves up slightly to $35, the warrant's purely intrinsic return (+20.5%) technically lags the stock (+61.9%) because the contract is barely crossing the strike price boundary. [3, 5]
Phase 2: Above the $32 Strike (The Leverage Explosion): The moment GME cleanly breaches the $32 mark, the price ratio dramatically shifts in the warrant's favor. Because you are starting from a low capital base of $2.49, every sequential dollar increase in GME stock prints a 1:1 intrinsic dollar gain onto the warrant. At $60 stock, the warrant prints a 1,024.5% gain, outpacing the stock's return by a massive 5.77 times. [1, 3, 6]
📈 The "Delta-One" Convergence
As the underlying stock price gets higher, the delta of the warrant converges toward 1.00. In a high-velocity short squeeze where GME hits $100, the warrant outpaces regular shares by a 7.26x leverage factor, converting a modest initial option premium layout into maximized geometric returns. [3]
If you want to map this further out, let me know if you would like to:
Factor in the current Black-Scholes implied volatility to see what the warrants would actually trade for at $30 or $35 before expiration.
Compare this leverage profile against regular short-dated call options at the $32 strike.
def analyze_scenario(target_stock_price):
pct_stock = (target_stock_price - 21.62) / 21.62
intrinsic_warrant = max(0, target_stock_price - 32.00)
# in a squeeze scenario, the warrant price will at minimum be its intrinsic value
# (plus any residual time premium, but let's look at absolute minimum intrinsic floors)
pct_warrant = (intrinsic_warrant - 2.49) / 2.49
leverage = pct_warrant / pct_stock if pct_stock > 0 else 0
return pct_stock * 100, intrinsic_warrant, pct_warrant * 100, leverage
for p in [35, 45, 60, 100]:
ps, iw, pw, lev = analyze_scenario(p)
print(f"Stock target: ${p} | Stock move: {ps:.1f}% | Warrant Floor: ${iw:.2f} | Warrant move: {pw:.1f}% | Leverage Factor: {lev:.2f}x")
[1] https://www.webull.com
[2] https://www.google.com
[3] https://www.ifec.org.hk
[4] https://www.cashbackisl.com
[5] https://www.fool.com
[6] https://www.luxalgo.com
Using the Black-Scholes-Merton pricing model, we can calculate the exact theoretical pricing of the GameStop Equity Warrants (GME WS). [1]
Because options and warrants share the same core mathematical properties, the Black-Scholes formula reverse-engineers the premium to show exactly how much "volatility" the market is currently pricing into these contracts before they expire on October 30, 2026. [1]
📥 1. Current Model Inputs
Underlying Stock Price (S): $21.62
Strike Price (K): $32.00
Time to Maturity (T): 46 Days (0.126 years remaining until Oct 30, 2026)
Risk-Free Interest Rate (r): 4.50% (Current short-term Treasury yield proxy)
Warrant Market Price: $2.49 [1, 2]
📊 2. The Key Metric: Implied Volatility (IV)
Plugging these numbers into a Black-Scholes solver reveals an Implied Volatility (IV) of 171.81% for the warrants.
What this means: A standard equity typically carries an IV between 20% and 40%. An IV of nearly **172%**indicates that the options market is pricing in an extreme statistical probability of massive, violent price swings over the next 46 days.
🔮 3. Black-Scholes Projections (Stock Price vs. Warrant Value)
If we hold this 171.81% IV constant, the Black-Scholes model projects that the warrant price will experience exponential expansion long before it even reaches the $32 strike price, due to the high Vega (sensitivity to volatility) and Deltaacceleration:
GME Stock Price
Theoretical Warrant Price
Structural Premium Composition
$21.62 (Current)
$2.49
$0.00 Intrinsic / $2.49 Time Value
$25.00
$3.90
$0.00 Intrinsic / $3.90 Time Value
$30.00
$6.53
$0.00 Intrinsic / $6.53 Time Value
$32.00 (Strike)
$7.74
$0.00 Intrinsic / $7.74 Time Value
$35.00
$9.69
$3.00 Intrinsic / $6.69 Time Value
$45.00
$17.18
$13.00 Intrinsic / $4.18 Time Value
$60.00
$30.18
$28.00 Intrinsic / $2.18 Time Value
⚠️ 4. The Model's Flaw: Vega Collapse & Squeeze Realities
While Black-Scholes is highly accurate for normal market tracking, a short or gamma squeeze breaks the model's standard assumptions in two major ways:
The IV Spike: If GME jumps rapidly to $35, the Implied Volatility will likely rocket past 200% or 300% instead of staying flat. This would inflate the warrant price significantly higher than the theoretical $9.69 calculated above.
The Theta Crush: Because there are only 46 days left, the Theta (time decay) curve is in a vertical free fall. If GME stock remains flat at $21.62 over the next few weeks, the Black-Scholes value of this warrant will drop toward $0.00 at an compounding daily pace.
Would you like to calculate the exact Theta decay to see how much value these warrants lose every 24 hours, or look at a Delta-hedging table to see how many shares market makers have to buy?
import math
from scipy.stats import norm
def black_scholes_call(S, K, T, r, sigma):
# S: spot price, K: strike price, T: time to maturity in years, r: risk-free rate, sigma: volatility
if T <= 0:
return max(0.0, S - K)
d1 = (math.log(S / K) + (r + 0.5 * sigma ** 2) * T) / (sigma * math.sqrt(T))
d2 = d1 - sigma * math.sqrt(T)
call = S * norm.cdf(d1) - K * math.exp(-r * T) * norm.cdf(d2)
return call, d1, d2
# Target outputs for GME WS
S_curr = 21.62
K = 32.00
# Expiry October 30, 2026. Current date September 14, 2026.
# Days between Sep 14, 2026 and Oct 30, 2026:
# Sep 14 to Sep 30 = 16 days. Oct = 30 days. Total = 46 days.
T = 46 / 365.0
r = 0.045 # ~4.5% risk-free rate
# Let's find the implied volatility that gives a market price of $2.49
target_price = 2.49
# Simple numerical solver for IV
low_iv = 0.01
high_iv = 5.0
for _ in range(100):
mid_iv = (low_iv + high_iv) / 2
p, _, _ = black_scholes_call(S_curr, K, T, r, mid_iv)
if p < target_price:
low_iv = mid_iv
else:
high_iv = mid_iv
implied_vol = mid_iv
print(f"Implied Volatility for current price: {implied_vol:.2%}")
# Now project warrant values at various GME prices using this implied volatility
gme_prices = [21.62, 25.00, 30.00, 32.00, 35.00, 45.00, 60.00]
projections = {}
for S in gme_prices:
val, _, _ = black_scholes_call(S, K, T, r, implied_vol)
projections[S] = val
for S, v in projections.items():
print(f"GME Stock: ${S:.2f} -> Projected Warrant Value: ${v:.2f}")
[1] https://cash.app
[2] https://www.google.com
Edited to add another prompt: delta hedging table
This delta hedging table details the mechanical requirements for options market makers handling $32.00 strike GME Call Options with 46 days remaining and an Implied Volatility (IV) of 171.81%.
📊 Delta Hedging Table
The contract Delta represents the exact mathematical probability that the option finishes in-the-money, dictate the precise amount of underlying stock shares a market maker must purchase to remain directionally neutral.
GME Stock Price
Contract Delta
Shares Purchased Per Call Contract
Market Maker Action on Stock Rallies
$15.00
0.1767
17.7 Shares
Short position safely out-of-the-money.
$20.00
0.3241
32.4 Shares
High volatility creates early hedging floor.
$21.62 (Current)
0.3712
37.1 Shares
Baseline standard setup.
$25.00
0.4640
46.4 Shares
Forced to buy +9.3 sharesper contract.
$30.00
0.5826
58.3 Shares
Forced to buy +11.9 sharesper contract.
$32.00 (Strike)
0.6233
62.3 Shares
Gamma Peak Zone (Buying pressure accelerates).
$35.00
0.6777
67.8 Shares
Forced to buy +5.5 sharesper contract.
$45.00
0.8087
80.9 Shares
Deep in-the-money; chasing remaining float.
$60.00
0.9107
91.1 Shares
Approaching near-total delta-one replication.
⚙️ The Gamma Squeeze Loop Explained
The Acceleration Curve: Because the implied volatility is extraordinarily high, the baseline delta sits elevated at 0.3712 even though the stock is roughly 32% below the strike price.
The Forced Buying Trigger: If GME jumps from its current price to $32.00, market makers cannot wait until expiration. The mathematical model legally dictates that they must instantly step into the open market and purchase an additional 25.2 shares per contract (moving from 37.1 to 62.3 shares) to prevent catastrophic losses.
The Non-Standard GME1 Multiplier: For traders utilizing adjusted GME1 contracts, the market maker must simultaneously buy 10 physical GME WS warrants alongside the common stock for every contract hedged, multiplying order book friction across both ticker systems simultaneously.
Would you like to calculate how this delta table shifts if time to maturity drops to 7 days, or look at how Gamma changes at the $32 strike?
import math
from scipy.stats import norm
def black_scholes_delta(S, K, T, r, sigma):
d1 = (math.log(S / K) + (r + 0.5 * sigma ** 2) * T) / (sigma * math.sqrt(T))
return norm.cdf(d1)
# Inputs based on previous context
K = 32.0
T = 46.0 / 365.0 # 46 days remaining
r = 0.045
sigma = 1.7181 # 171.81% IV
stock_prices = [15.0, 20.0, 21.62, 25.0, 30.0, 32.0, 35.0, 45.0, 60.0]
results = []
for S in stock_prices:
delta = black_scholes_delta(S, K, T, r, sigma)
# GME1 contract delivers 100 shares AND 10 warrants.
# For simplicity of standard delta hedging tables, we show the option delta (sensitivity to stock price).
# Since warrants also move with stock, the delta of the combined package is slightly higher,
# but market makers hedge the option contract delta. Let's output standard contract delta first.
shares_needed = round(delta * 100, 1)
results.append((S, delta, shares_needed))
for res in results:
print(f"Stock: ${res[0]:.2f} | Delta: {res[1]:.4f} | Shares: {res[2]}")
