Even 'Bond King' Bill Gross is getting in on Trump Media's options-trading frenzy

• Meme-stock mania has caused options activity to balloon around Trump Media.
• That includes trades made by Bill Gross, who told Bloomberg he's selling put and call options.
• These bets indicate he expects DJT shares to remain between $45 and $95 before an April expiry.

A rising rebound in meme-stock investing has sent Donald Trump's media company bursting to sky-high valuations this week, while options trading has ballooned on the freshly-minted meme stock, according to Bloomberg data.  

Though retail investors are chiefly responsible for this, the Trump Media stock has also caught the attention of Wall Street legend Bill Gross, commonly referred to as the "Bond King."

"A genius can have a high IQ or invest in the stock market during a bull market. A genius can also be an investor with the courage to sell DJT options at a 250 annualized volatility," he tweeted on Thursday, referring to Trump Media's new ticker symbol.

The legendary investor has since confirmed with Bloomberg that he has sold put and call options expiring in April effectively wagering that DJT shares will remain between $45 and $95 in that time.

 

For those unfamiliar with the strategy, options contracts are bought at a premium from a seller, and give the holder the right to purchase or sell a stock at an agreed price later in the future. 

Sellers such as Gross are betting that these contracts expire worthless, in which case he can keep the premium at no loss. According to The Wall Street Journal, he's said to have pocketed $10 million doing this with GameStop, the original meme stock known for its own frenzy back in 2021.

Such stocks don't trade on fundamentals, but are highly volatile market movers that reach unjustified valuations. 

For Trump Media, was also thrown into a higher gear by staunch supporters of the former president. 

The cohort rallied on social media to pump the company up as it merged with Digital World Acquisition Corp this week, it's publicly-traded shell company. Accounting for DWAC's earlier price, the stock jumped as high as 275% year-to-date.

As to the broader stock market, Gross has recently warned of "excessive exuberance" caused by AI excitement. The bond king is also shorting 5- and 10-year Treasurys.