GameStop has been fighting its way back from the dead, and the
bulls apparently think that it still has room to run.
optionMONSTER's Heat Seeker monitoring program detected the
purchase of 2,000 June 32 calls for $2.44. Volume was 19 times open
interest at the strike, indicating that new money was put to work
in the trade.
locks in the price where investors can buy shares in the video-game
retailer, which has doubled since August. That can result in some
nice leverage if they keep climbing, while limiting the amount of
money that will be lost if they decline. (See our
section for more on how options can be used to manage risk.)
GME is up 0.65 percent to $32.51 in afternoon trading. The stock
was weak for years amid pessimism that the company would be unable
to survive as game sales shifted online and away from
brick-and-mortar stores. But then a big short squeeze kicked in
last summer after it touched its lowest level since early 2006.
Earnings have also mostly been strong and valuations are low.
The date of the next report hasn't yet been announced, but 2012's
calendar suggests it will occur in mid-May. Those June 32s would
stand to profit if the numbers are good and the stock rallies.
Total option volume is still below average in GME today, but calls
outnumber puts by more than 7 to 1.
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