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This Texas Oil Company Just Became The Latest Meme Stock

A small crude oil company based in Texas is seeing a surge in out-of-the-money call options in what could be a sign of another burst of retail trader action, Bloomberg reports, citing Reddit discussion threads mentioning the company.

Ring Energy, which pumped a mere 9,500 barrels of oil daily as of the third quarter of 2020, may become the second oil “meme stock”, after it saw its share price double over the last two weeks.

Last week, media reported the case of New Concept Energy, another Texan company even smaller than Ring Energy, which only produces some 70 barrels of oil equivalent daily, saw its stock price soar by as much as 1,000 percent to $128 apiece. At the time, a Redditor from the WallSteetBets group that caused the now notorious surge in the price of GameStop shares said the group had nothing to do with the price rise of New Concept Energy, blaming it on “market manipulation.”

The so-called meme stocks—the stocks of small and normally insignificant companies—have become the focus of attention for many retail traders recently as a way of sticking it to Wall Street hedge funds that have large short positions on many of these companies, which tend to be having a hard time for one reason or another.

The trading frenzy the market witnessed in the last couple of weeks indeed led to substantial losses for some hedge funds. Still, observers were quick to warn that retail traders stand to lose money too when the artificially pumped up rally of the stocks in question ended.

Based on the latest reports, it seems, however, that losses or not, retail traders have got a taste of moving the market in one direction or another and are not going to completely stop challenging the big players.

By Irina Slav for Oilprice.com

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