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Tech investor Chamath Palihapitiya said Tuesday he is dipping his toe into the frothy trading around video game retailer GameStop . A flood of retail trading has pushed the stock and other

heavily shorted names higher in recent weeks, causing major losses for short sellers . Trading of GameStop has been regularly halted due to volatility, including once shortly after

Palihapitiya said he was buying call options. The CEO of Social Capital and former Facebook executive said on Twitter that he bought February call options on GameStop with a strike price of

$115. Call options are derivatives that give the buyer the right to purchase a stock at a set price. The trader makes money when the stock rises above the strike price, allowing the person

with the call option to purchase shares at a discount. The options contract will increase in value if that happens. The strike price on Palihapitiya's call options is deeply out of the

money for now, but could pay off big if he's right. A move to $115 would represent a nearly 50% increase from where GameStop closed on Monday. However, the stock has been extremely

volatile, and traded above $159 per share at one point during Monday's session. The stock was trading at about $90 per share on Tuesday, putting its month-to-date gain at more than

370%. To be sure, Palihapitiya said he bought the GameStop options based on feedback from other Twitter users, and the position would not be a significant piece of his investment portfolio.

Palihapitiya has been a major player in the surge of special purpose acquisition vehicles, including announcing his involvement in two new deals on Monday . Chamath Palihapitiya Cameron

Costa | CNBC Tech investor Chamath Palihapitiya said Tuesday he is dipping his toe into the frothy trading around video game retailer GameStop. A flood of retail trading has pushed the stock

and other heavily shorted names higher in recent weeks, causing major losses for short sellers. Trading of GameStop has been regularly halted due to volatility, including once shortly after

Palihapitiya said he was buying call options.