Glu Mobile Inc. (GLUU) Successfully Captures Poke Radar

Glu Mobile Inc. (NASDAQ:GLUU) is falling after acquiring Pokemon Go assist app, Poke Radar

Sep 14, 2016 at 12:55 PM
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Glu Mobile Inc. (NASDAQ:GLUU) is on the move, after the mobile game developer announced it had acquired Poke Radar -- an app that shows real-time locations of Pokemon for players of Niantic's hit game, Pokemon Go -- for $500,000 in cash. While GLUU initially jumped on the news, the stock has since fallen 2.6% to $2.21 -- with traders both in and out of the options arena keeping a close eye on the stock's whipsaw price action.

In the option pits, bulls have seemingly been holding out hope that the mobile game maker will recover. Amid light absolute volume, GLUU has racked up a 10-day call/put volume ratio of 53.20 at the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX). This ratio ranks higher than 89% of all other annual readings, indicating calls have been bought to open over puts at a faster-than-usual clip in recent weeks.

Drilling down, the top front-month open interest position is the September 3 call, while the lower strike October 2.50 call has seen the biggest rise in open interest over the past two weeks. In fact, nine of GLUU's top 10 open interest positions are calls, although considering GLUU doesn't have much room to go lower, this may be because put strikes are relatively limited.

While some of this buy-to-open call activity may be of the traditional bullish variety, another explanation for the elevated appetite for calls is that short sellers could be hedging their bearish bets against any unexpected upside. Short interest accounts for 16.3% of GLUU'S float, and it would take 11 days to cover these pessimistic positions, at the stock's average pace of trading.

On the charts, Glu Mobile Inc. (NASDAQ:GLUU) has had a rough go of it, down over 50% year-over-year. The shares have been mostly contained between $2.20 and $2.60 since a post-earnings bear gap in early May, with a mid-July breakout attempt halted by GLUU's 200-day moving average.

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