Dave & Buster's Stock Reverses Early-Morning Slide

Options traders are chiming in at 14 times the usual volume

Deputy Editor
Mar 29, 2022 at 10:41 AM
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Dave & Buster's Entertainment Inc (NYSE:PLAY) is reversing premarket losses, despite the company reporting fourth-quarter earnings of 52 cents per share on revenue of $343.1 million, compared to estimates of 60 cents per share on $364.5 million. The restaurant and entertainment concern said the results were still solid considering Covid-19 headwinds. At last check, PLAY is up 6.3% to trade at $45.82. 

PLAY has had an extremely volatile run on the charts since the start of the year, though the stock is currently above all relevant short- and long-term moving averages. Up 16.1% year-to-date, the equity is now inching toward its March 2, eight-month high of $47.19.

An unwinding of pessimism in the options pits could provide tailwinds for PLAY. Despite calls outnumbering puts on an absolute basis, the stock's 50-day put/call volume ratio of 0.86 at the International Securities Exchange (ISE), Cboe Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX) is in the elevated 97th percentile of its annual range. This suggests a very healthy appetite for long puts of late.

Drilling down to today's options activity, 6,208 calls and 7,644 puts have crossed the tape, which is 14 times what is typically seen at this point. Most popular is the 4/1 37-strike put, followed by the 35-strike put in the same weekly series, both of which expire at the close on Friday.

There is plenty of short-covering potential left, too. Short interest is up 4.8% in the most recent reporting period, and makes up 13% of the stock's available float, or nearly one week's worth of pent-up buying power. 

 

 

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