Call Buyers Have Been Blasting This Video Game Stock

TTWO shares have underperformed in recent months

by Josh Selway

Published on May 3, 2018 at 1:30 PM
Updated on Jun 24, 2020 at 10:16 AM

There's been an outrageous amount of call activity on Take-Two Interactive Software Inc (NASDAQ:TTWO) in recent weeks. According to data from the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX), the 10-day call/put volume ratio for TTWO has jumped to 12.31 -- in the 97th percentile of its annual range. In other words, call buying has rarely been as popular relative to put buying.

Looking closer, the May 105 and 110 calls saw the biggest increases in open interest during the past two weeks, each seeing a mix of buying and selling. Third on the list was the June 110 call, where traders bought to open a number of positions in hopes of TTWO shares rallying back to $110 -- a 6.6% rise from the current price of $103.17. However, most of these positions were initiated back on April 23 when the equity was trading near $98.12 and the calls were crossing for $2.00. Today, the call options sport a volume-weighted average price (VWAP) of $3.71.

Speaking of today's activity, calls are hot again. More than 5,400 calls have crossed today, compared to a daily average of just 2,829. Most of this activity is from short-term traders, however, with new positions opening at the weekly 5/4 102-, 105-, and 106-strike calls. The latter two strikes are seeing similar action in the weekly 5/11 series, too. Those buying the contracts expect more upside from Take-Two Interactive before the respective expiration points of tomorrow and next Friday.

This heavy call activity comes as the video game stock has been struggling on the charts. After hitting an all-time high of $129.25 back on Feb. 1, TTWO shares quickly reversed course and traded as low as $92.81 on April 4. The equity is now testing its 200-day moving average, after yesterday being rejected at a 38.2% Fibonacci retracement of that February-April sell-off. Meanwhile, a quick glance at the schedule shows Take-Two earnings scheduled for after the close on Wednesday, May 16, with sector peer Activision Blizzard (ATVI) due to report this evening.

ttwo share price


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