GameStop Stock Pops After Announcing Executive's Departure

Call volume is running at double the intraday average

Digital Content Manager
Nov 1, 2021 at 11:27 AM
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GameStop Corp. (NYSE:GME) is once again in the spotlight, after it announced Chief Operating Officer Jenna Owens has agreed to leave just seven months after joining the company. Prior to that, Owens was an executive at Amazon.com (AMZN) and Alphabet (GOOGL). Her departure is the first major one since Matt Furlong took over as chief executive officer in June. At last check, GME is up 3.5% at $190.19.

The meme stock has been trading mostly sideways on the charts, after sharp rallies in March and June. A floor at the $165 level has been supporting the shares, while a ceiling at the $220 level has been keeping the security far away from its Jan. 28, all-time high of $483. Year-over-year, though, GameStop stock still sports a jaw-dropping 1,755.9% lead. 

The brokerage bunch is overwhelmingly bearish towards GME, with all five in coverage carrying a tepid "hold" or worse rating. Plus, the 12-month consensus target price of $88 is a 54.6% discount to current levels. The security could see additional short squeezes, though, as the 7.67 million shares sold short still make up 12.2% of its available float.

Meanwhile, long calls have been getting picked up at a much quicker-than-usual pace. At the International Securities Exchange (ISE), Cboe Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX), the stock's 50-day call/put volume ratio of 2.60 stands higher than 80% of readings from the past year.

Drilling down to today's options activity, 38,000 calls have crossed the tape so far, which is double the intraday average. Most popular is the 11/5 200-strike call, followed by the 195-strike call in the same weekly series, with positions currently being opened at both.

For those wanting to get in on GME's next move, options look like the way to go. The equity's Schaeffer's Volatility Index (SVI) of 70% sits higher than 1% of readings from the past 12 months. In simpler terms, options traders are pricing in low volatility expectations right now.

What's more, the equity's Schaeffer's Volatility Scorecard (SVS) ranks at 91 out of a possible 100, indicating GameStop stock tends to outperform these volatility expectations.

 

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