Take-Two Stock Scores Bull Note, New High Ahead of Earnings

TTWO stock has gained 16% in 2018, and set a record high earlier today

Managing Editor
Feb 1, 2018 at 10:45 AM
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Take-Two Interactive Software Inc (NASDAQ:TTWO) is up 0.7% to trade at $127.37 this morning, after Morgan Stanley initiated coverage on the video game stock with a "overweight" rating and a price target of $150. The analyst in coverage noted that Take-Two's Grand Theft Auto franchise generates enviable engagement and monetization.

In addition to the bullish analyst attention today, the video game stock received a halo lift from sector peer Electronic Arts (EA), which reported upbeat earnings yesterday. As a result, TTWO stock touched a fresh record high of $128.33 earlier today. The equity has gained 16% already year-to-date, guided higher by its 20-day moving average, and on Wednesday broke out above stubborn resistance at $120.

In the options pits, traders have been targeting TTWO calls. At the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX), TTWO stock's 10-day call/put volume ratio is 4.74. Not only does this indicate the calls bought to open have more than quadrupled puts in the past two weeks, but this ratio ranks in the 71st percentile of its annual range -- pointing to a healthier-than-usual appetite for calls over puts in recent weeks.

The shares typically reward option buyers, too, with TTWO's Schaeffer's Volatility Scorecard (SVS) perched at 94 (out of 100). What this means is that the stock has made larger moves on the charts in the past year than its options premiums have priced in -- making it a reliable target for premium buyers.

However, TTWO's fiscal third-quarter earnings report is set for next Wednesday, Feb. 7, so short-term volatility is currently elevated. Schaeffer's Volatility Index (SVI) checks in at 54%, which arrives in the steep 86th percentile of its annual range.

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