Video Game Stock Higher Despite GTA Delay

TTWO options volume is running at 19 times the intraday average amount

Digital Content Manager
May 17, 2024 at 10:46 AM
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Take-Two Interactive Software, Inc (NASDAQ:TTWO) stock is up 2.2% to trade at $149.43, reversing premarket losses after the video game company reported better-than-expected profits for the fiscal fourth quarter. More concerning though, Take-Two also slashed its bookings forecast for next year and pushed back its Grand Theft Auto release to the fall of 2025, instead of later this year. 

The stock is shrugging off three price-target cuts in response, the worst coming from BofA Global Research to $160 from $170. UBS, meanwhile, hiked its target to $156 from $151. On the charts, the shares are now testing their 80-day moving average, a trendline that's acted as overhead pressure since mid-February, with a rally in April losing steam there. So far in 2024, TTWO is down 9.2%.

It might be time to monitor the short squeeze situation. Short interest dipped 3% in the last reporting period, yet the 8.49 million shares sold short make up 5% of the stock's available float, or roughly one week's worth of pent-up buying power, at its average pace of trading.

Drilling down to today's options activity, 5,564 calls and 14,000 puts have already swapped hands, volume that's 19 times the intraday average amount. The most popular contract is the June 145 put, where sell to open activity is occurring.

premium-selling strategy could be the move for the video game stock. TTWO sports a Schaeffer's Volatility Scorecard (SVS) of 7 out of 100. In other words, the equity has consistently realized lower volatility than its options have priced in.

 

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