Options Traders React to Take-Two Interactive Buyout Buzz

Put buyers have been busier than usual in recent weeks

by Karee Venema

Published on Mar 13, 2019 at 2:48 PM

Take-Two Interactive Software, Inc. (NASDAQ:TTWO) stock is trading at the top of the S&P 500 Index (SPX) -- up 5.4% at $94.71 -- as rumors swirl of a potential Sony (SNE) takeover. Options traders are taking note as the shares head toward their best day of the year, with calls running at almost six times the average intraday pace.

By the numbers, 27,711 calls have changed hands, compared to fewer than 2,500 puts. Buy-to-open activity has been detected at the March 91 and 95 calls, as well as the April 95 and 110 calls. If this is the case, call buyers expect TTWO stock to extend today's upside over the next six weeks.

More broadly speaking, it's been put buyers who've been busier than usual in recent weeks. At the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX), TTWO's 10-day put/call volume ratio of 0.57 ranks in the 72nd annual percentile. While this means that the number of long calls has outweighed puts on an absolute basis, the rate of put buying has been accelerated.

The skepticism toward Take-Two Interactive Software stock is seen elsewhere, with short interest up 69.4% in the two most recent reporting periods. The 6.06 million shares currently sold short represents 5.8% of TTWO stock's available float, or 1.9 times the average daily pace of trading.

Looking at the charts, the video game stock hit a record high of $139.91 on Oct. 1, before sliding all the way to an 18-month low of $84.41 on Feb. 27. While TTWO shares bounced from here, today's rally is running out of steam near $95 -- a region that coincides with the equity's pre-bear gap levels from mid-February, as well as its 40-day moving average.

ttwo stock daily price chart on march 13

 

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