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Option Brief: Take-Two Interactive Software, Inc. (NASDAQ:TTWO) puts are trading at about twice the average intraday pace -- outnumbering calls by a margin of almost 3-to-1. Most active is the January 2014 16 strike, where roughly 2,250 contracts -- or 79% of the day's put volume -- have changed hands.
What's more, the majority of the contracts traded at this out-of-the-money strike went off at the ask price, implied volatility has ticked higher, and volume exceeds current open interest. Collectively, this -- plus data from the International Securities Exchange (ISE) -- implies that long put positions have been initiated here.
At last check, TTWO was down 2% to trade at $16.53, and today's put buyers are betting on the equity shedding another 7.9%, to finish below the breakeven rail of $15.22 (strike minus the volume-weighted average price of $0.78) by January 2014 options expiration. Looking back, the stock has not explored such territory since the beginning of July.
Meanwhile, from a broader technical perspective, Take-Two Interactive Software, Inc. (NASDAQ:TTWO) stands 50.1% higher on a year-to-date basis. However, the equity hasn't had much luck of late, as the stock has dropped 12.2% over the past three months. Given TTWO's overall uptrend this year, a portion of the put buying at the aforementioned strike could be indicative of shareholders hedging against a continued decline.