2 Video Game Stocks to Target in May

Both TTWO and EA could see an unwinding of pessimism in the options pits

Deputy Editor
May 2, 2023 at 12:24 PM
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Investors should keep their eyes on Take-Two Interactive Software, Inc (NASDAQ:TTWO) and Electronic Arts Inc. (NASDAQ:EA). Despite entering a historically bearish season, both video game stocks landed on Schaeffer's Senior Quantitative Analyst Rocky White's list of best S&P 500 Index (SPX) stocks to own this month. 

Per White's data, TTWO averaged a one-month return of 10.8% in May over the last 10 years. Take-two Interactive stock was last seen down 2.1% at $121.48, so a move of similar magnitude would put TTWO near levels note seen since August 2022. The equity's 40-day moving average has provided support since a November pullback to  three-year lows. Year-to-date, the shares are up nearly 16%.

TTWO Chart May 22023

An unwinding of pessimism could give the stock additional tailwinds. Over at the International Securities Exchange (ISE), Cboe Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX), TTWO's 10-day put/call volume ratio of 2.43 stands higher than 90% of readings from the last year. Echoing this, the security's Schaeffer's put/call open interest ratio (SOIR) of 1.06 ranks higher than 81% of annual readings.

TTWO is overdue for upgrades as well; 11 of the 21 brokerages rate the stock a tepid "hold," which leaves ample room for bull notes in the future.

Meanwhile, sector peer EA averaged a 14.1% gain in nine out of the last 10 years. Electronic Arts stock is down 1.9% to trade at $125.01 at last glance, so a comparable to previous years would put EA at its highest level since June 2022. Year-over-year, the equity boasts a 4% lead.

EA Chart May 22023

Electronic Arts stock could also benefit from a shift in the options pits. The security's 10-day put/call volume ratio of 1.60 at the ISE, CBOE, and PHLX ranks in the 88th percentile of the last 12 months.

 

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