Very high strike price for call option (GME)

Question

I noticed that there are many call contracts on GME at a strike of $800 that expire in 5 days. Currently the price of GME is at $110.

I'm just wondering why anyone would go for such a high strike ? Wouldn't it be wiser to buy a call at a lower strike point ? I mean, if GME actually ends up at $800 by the end of the week, then anyone who buys that option is barely breaking even.
If someone actually believes that GME will go to $800, wouldn't buying a call option at a lower strike point give them more of an oportunity for profit ?
Sorry if my question seems very basic, but I just started learning about options.
Thanks,
Liam

nanoman · Accepted Answer

if GME actually ends up at $800 by the end of the week, then anyone who buys that option is barely breaking even.
If someone actually believes that GME will go to $800, wouldn't buying a call option at a lower strike point give them more of an oportunity for profit ?

Yes. But if GME goes to $900 then they would make ~80x on the $800 call. That is the basis for demand for such options: not that GME could go to the strike, but that it could go well above the strike.
I wouldn't be buying that option myself, but evidently someone is.

Bob Baerker · Answer

You have assumed that everyone who is buying GME $800 strike calls is betting on the stock rising significantly by Friday.  That's not the case because there are many other option strategies that might involve buying or selling that call.
Someone who is short the call could be buying to close the position.  Or perhaps he has a profitable call credit spread and is closing it to book profits.  There are many other reasons for possible the trades.
Options provide leverage and they can provide large gains before expiration.  It's not a good trade because the implied volatility is sky high, hugely inflating the premium.  If GME doubled in price today, the $800 call would be worth 10 times its current price.

Very high strike price for call option (GME)

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