Alpha Exchange GME 5 Years Later…Lessons and Threats
Jan 27, 2026
A five-year look back at the wild GameStop run and the market forces that fed it. Discussion of how pandemic-era stimulus, zero rates, and retail platforms fueled massive call buying. A deep dive into option math, implied-vol spikes, hedging failures, and how dealer flows amplified the squeeze. Coverage of broker trading halts, index distortions, and the rapid unwind that followed.
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GameStop's Pre-Meltdown Rollercoaster
- Dean Curnutt recounts GameStop's market cap collapsing to $400M then recovering to $1.3B by end of 2020 amid the COVID crash and rebound.
- This sets the stage for the 2021 speculative episode that followed.
Vol Spikes Amplify Option Costs
- Spike in realized or implied volatility translates to dramatically higher option prices and tail risks for single-stock exposures.
- One-month put prices rose from 9.3% to 27% as implied vol jumped from 82 to 236 in March 2020.
OTC Variance Swap Run Amok
- Dean tells the story of a trader who sold a $50,000-per-vol-point variance swap on GME near 140 vol and faced a realized vol of 643%, producing a huge payout.
- The raw payout computed to $69 million before contractual caps reduced losses.