Investors Should Keep an Eye on This Video Game Stock

The stock is already up 5.5% in 2022

Assistant Editor
Jan 20, 2022 at 10:33 AM
facebook twitter linkedin


According to a column in the Financial Times, Electronic Arts Inc. (NASDAQ:EA) could be the stock to watch with the current happenings in the video game sector. Electronic Arts stock was last seen 1.8% higher to trade at $139.41 this morning, following news that Microsoft (MSFT) is acquiring Activision Blizzard (ATVI) for a record $68.7 billion. The positive price moves across the industry suggests investors are opening up to media players that are toying with breaking into the fledgling metaverse. 

EA's normally quiet options pits are brimming with bullish activity in response to the speculation. So far, 668 calls have exchanged hands, which is double the amount that typical at this point in the day. The most popular is the January 140 call, followed by the 140 put from the same monthly series.

More broadly, an unwinding of pessimism over in the options pits could send Electronic Arts stock higher still. At the International Securities Exchange (ISE), Cboe Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX), 2.46 puts have been bought for every call over the last two weeks. This ratio stands higher than 100% of readings from the past year, indicating long puts are being picked up at a much faster-than-usual rate. 

Echoing this, EA's Schaeffer's put/call open interest ratio (SOIR) of 1.33 ranks in the 97th percentile of its annual range. This indicates near-term put open interest outweighs call open interest by a wider-than-usual margin at the moment.

A volatile performance on the charts over the last 12 months has the equity sitting roughly 3% below its year-over-year breakeven level. However, EA is pushing for a comeback. Following an 11.4% drop in November 2021, the stock managed to clock a 6.2% leap in December, and has already added 5.5% in 2022.

 

 




 
Special Offers from Schaeffer's Trading Partners