GameStop has been hovering, and one investor wants protection
ahead of the company's earnings report.
optionMONSTER's Depth Charge tracking system detected the purchase
of about 2,000 April 24 puts for $1.39 and the sale of a matching
number of April 21 puts for $0.31 on Friday. Volume was more than
twice open interest in both strikes.
The trade cost $1.08 and will earn a maximum profit of 178 percent
if GME closes at or below $21 on expiration. That's roughly the
same price where it found support for most of August, which could
make some chart watchers think that a drop won't violate that
GME fell 1.28 percent to $23.90 on Friday and has spent most of the
last year fluctuating on either side of $24. Recently it seems to
have been consolidating below its 200-day moving average,
potentially suggesting that it's getting ready to push lower.
Investors are generally negative on the company, doubting its
growth potential as videogames increasingly move online and away
from retail stores. All of its recent reports have shown weakness
in its business, and Friday's option trade may be betting that the
shares will fall before the next earnings release on March 22.
Almost 9,000 GME contracts traded in the session, more than triple
its daily average. Puts accounted for two-thirds of the activity,
according to the Depth Charge.
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