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Mobile game retailer Glu Mobile Inc. (NASDAQ:GLUU - 3.68) is on the radar today, with the shares up more than 10% at last check. As such, bullish bettors are coming out of the woodwork, with speculators picking up call options to roll the dice on more short-term upside for the stock.
In afternoon trading, GLUU has seen nearly 6,400 calls cross the tape -- about eight times its average intraday volume, and more than six times the number of GLUU puts exchanged. Garnering notable attention is the April 5 call, which has seen more than 1,800 contracts change hands at a volume-weighted average price (VWAP) of $0.14. Most of the calls traded on the ask side, and volume has exceeded open interest at the freshly front-month strike, pointing to newly bought bullish bets.
In order to profit on the play, the buyers need GLUU to muscle north of $5.14 (strike price plus VWAP) within the next few weeks. From current levels, it would require a near 40% rally before Glu Mobile hits breakeven. Against this backdrop, and considering short interest accounts for more than 23% of the stock's total available float, it's possible that short sellers are buying the calls to hedge their bets.
Prior to today's jump -- induced by an upgrade to "outperform" from "market perform" at Northland Capital Markets -- option traders were singing a different, bearish tune. On the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX), the equity's 10-day put/call volume ratio of 0.06 ranks in the 84th percentile of its annual range, hinting at a healthier-than-usual appetite for bearish bets during the past couple of weeks.
On the charts, Glu Mobile has outperformed the broader S&P 500 Index (SPX) by about 39 percentage points during the past month, and is on pace to end atop its 200-day moving average for the first time since early October.