Bearish Options Bettor Takes Aim at Beaten-Down Glu Mobile Inc. (GLUU)

Glu Mobile Inc. (GLUU) put options are running at an astounding 75 times the average intraday pace

Nov 15, 2016 at 2:30 PM
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Glu Mobile Inc.'s (NASDAQ:GLUU) options pits are ablaze this afternoon. Puts are especially in demand, running at 75 times the usual intraday pace -- though it's worth noting that the video game stock's average daily put volume is only 93 contracts. By the numbers, 5,051 put options have already crossed the tape, compared to 264 calls.

The vast majority of the activity has taken place at the near-the-money December 2 put. According to Trade-Alert, one speculator bought to open a block of 5,000 contracts for $0.15 apiece, yielding an initial cash outlay of $75,000 (premium paid * number of contracts * 100 shares per contract). In so doing, her goal is for GLUU to breach $2 by December expiration, or risk losing the initial premium paid.

Today's action stands in stark contrast to the prevailing options trend toward calls. Specifically, during the past 10 days at the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX), roughly 6,550 calls have been bought to open versus only 75 puts. Similarly, GLUU's Schaeffer's put/call open interest ratio (SOIR) of 0.22 ranks in the low 6th annual percentile.

That's not to say all call buyers are bullish. Considering 16% of GLUU's float is sold short -- which would take over three weeks to cover, at the stock's average daily volume -- it's likely at least some out-of-the-money calls have been purchased by short sellers hedging against upside risk.

Adding credence is this theory are Glu Mobile Inc.'s (NASDAQ:GLUU) long-term technical woes. Down 1% at $2.08, the stock has been trekking steadily lower for most of 2016. Specifically, since hitting an annual high of $4 in late February, GLUU shares have surrendered 48% of their value.

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