Take-Two Interactive Software has broken a key level, and the
bulls think there is no going back for the video-game maker.
optionMONSTER's Heat Seeker monitoring show that a trader sold
7,500 June 16 puts for $0.875 and bought an equal number of June 16
calls for $1. Volume was more than 7 times the previous open
interest at each strike, indicating that new money was put to work.
The position cost just $0.125 and is highly leveraged to gains in
shares of the company, which reports fourth-quarter earnings this
afternoon. The last release in March beat expectations on the top
and bottom lines, propelling the stock higher.
If TTWO closes below $16 on expiration, the investor will face the
obligation to buy stock at that level, and they'll be losing money.
But above that level the trader stands to earn huge profits, with a
gain of 700 percent in the calls if the stock moves only to $17.
section for more on the dynamics of
TTWO rose 2.81 percent to $16.44 on Friday and has more than
doubled since last August as years of negativity abate in the
video-game industry. The stock struggled at $16 in March and April
but found support above that level last week. Some chart watchers
could view that price action as bullish.
Total option volume was 70 times greater than average in the
session, according to the Heat Seeker.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of The NASDAQ OMX Group, Inc.
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