Stick With GLUU Stock, Says Signal

The stock's recent pullback has options traders piling on with puts

Deputy Editor
May 22, 2019 at 2:03 PM
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The gaming concern Glu Mobile (NASDAQ:GLUU) has seen a dramatic climb this year, before plateauing right beneath its high of $11.75 on April 5. The stock managed a brief bounce off a familiar floor at the 40-day moving average, but wound up gapping beneath the trendline, following a first-quarter earnings flop. There might still be hope for the Kylie Jenner stock, however. A solid area of support has formed at the $9 region, and a brand new bull signal just flashed on the charts. 

GLUU's recent pullback had it within one standard deviation of its 160-day moving average after a lengthy stretch above the trendline. Glu Mobile has run into this signal seven times in the past three years, according to data from Schaeffer's Senior Quantitative Analyst Rocky White. The equity averaged an impressive 14.33% return after these signals. From its current perch at $8.60, a move of similar magnitude would put the stock back around $9.83.

GLUU Chart May 22

Options activity has been bearish, though. The mobile game stock currently sports a 10-day put/call volume ratio of 0.85 at the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX) that sits higher than all other readings from the past year. Should GLUU stage another rebound, an unwinding of pessimistic positions could put even more wind at the equity's back. 

Now might be time to bet on GLUU's next rebound with options. The security's Schaeffer's Volatility Index (SVS) of 45 sits in the relatively low 15th percentile of its annual range. This means near-term options traders are pricing in relatively low volatility expectations. 

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