Trade buys time for Take-Two rebound


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Someone is trying to repair a broken trade in Take-Two Interactive Software.

optionMONSTER's monitoring programs detected the sale of 2,183 January 2014 15 puts for $5.60. An equal-sized block was purchased in the September 15 puts for $4.85 at the same time, although volume was below previous open interest.

TTWO fell 1.36 percent to $10.14 on Friday. The video-game maker has lost more than one-third of its value over the last six months, plagued by weak sales as business increasingly shifts to the Internet.

It appears the investor had previously sold the September contracts, looking for TTWO to hold its ground above $15. Now that the stock has fallen below that level, he or she must adjust the position or be forced to buy shares at the strike price in the coming weeks.

So, they bought back the September puts and rolled the position forward in time. They now have an additional 16 months for the stock to rebound, and collected an incremental $0.75 of premium.
The trade accounted for almost all TTWO's option volume in the session.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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This article appears in: Investing , Options

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