Bears Cheer as Holiday Sales Drill GameStop Corp. (GME)

GameStop Corp. (GME) is on pace for its worst one-day performance since November

Jan 12, 2016 at 11:44 AM
facebook twitter linkedin

GameStop Corp. (NYSE:GME) reported weak holiday sales this morning, prompting the retailer to cut the top end of its fourth-quarter per-share earnings estimate. As such, the stock is imploding, down 6.3% at $27.54 and fresh off a two-year low of $26.31. While this is bad news for shareholders, it's likely being received differently by option traders and short sellers.

During the past 10 weeks across the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX), GME has racked up a put/call volume ratio of 0.96. While this ratio indicates long calls edge out puts on an absolute basis, it nonetheless outranks four-fifths of comparable readings from the prior year. In other words, traders have been buying to open puts over calls at a faster-than-usual pace in recent months.

It's a similarly bearish landscape among short sellers. In fact, nearly half of GME's float is sold short, representing nearly three weeks' worth of trading activity, at typical volumes.

As alluded to, it's a brutal day for GameStop Corp. (NYSE:GME) shares. To put things further into perspective, the stock is on track for its worst single-session percentage loss since gapping lower in early November, following a bearish brokerage note.

Minimize Risk While Maximizing Profits

There is no options strategy like this one, which consistently minimizes risk while maintaining maximum profits. Perfect for traders looking for ways to control risk, reduce losses, and increase the likelihood of success when trading calls and puts. The Schaeffer’s team has over 41 years of options trading success targeting +100% gains on every trade. Rest assured your losses are effectively limited to your initial cost at the time of making your move! Don't waste another second... join us right now before the next trade is released! 


300x250 - Banner 3 - v1