Buying A Call Option on Take-Two Interactive Software $TTWO

| May 20, 2015 | 0 Comments

Take-Two Interactive Software $TTWOBuying A Call Option On Take-Two Interactive Software $TTWO                                       

Video game companies can make for interesting investment opportunities.  Like a movie production company, the fortunes of a business can often come from one blockbuster hit.  However, it can be often difficult to predict what game is going to be the next blockbuster.

Moreover, the gaming industry is changing dramatically.  No longer are big, expensive games the most played by gamers.  These days, mobile gaming has become the next big thing.  Yet, big hits can still drive profits on any gaming platform.

So where does that leave a company like Take-Two Interactive Software $TTWO?

$TTWO is a $2 billion video game developer.  The company is mostly known for its Grand Theft Auto titles, but also produces games in a variety of genres. The company offers products for PCs, gaming systems, and mobile devices.

Currently, $TTWO is trading at $28.04.  That’s 9% from the 52-week high and 49% from the 52-week low.  The stock is down 14% on the year but is still up 16% on the day of this writing.

So is now the time to buy a call option on $TTWO?

As a reminder, a call option makes money when the underlying stock goes up.  Is $TTWO going to remain hot?

For a more in-depth look at the well-known video game company, you can click the link.

Here’s the deal…

$TTWO shares are exploding higher on impressive quarterly earnings results.  The company posted earnings of $0.49 per share (on $428 million in revenues), compared to just $0.27 expected by analysts.  That’s obviously a huge beat.

What’s more, $TTWO’s guidance for the quarter ($0.25 to $0.35 per share) is vastly higher than analysts’ expectations (just $0.02).  In this case, the impressive results were driven by a well-known blockbuster game, Grand Theft Auto.

Here’s the chart of $TTWO:

call option buying opportunity, a chart of $TTWO

As you can see above, the stock has been mostly trading below the 50-day moving average until the earnings beat.  Now the share price has rocketed higher and is heading towards 52-week highs.

Now could be a great time to buy a $TTWO call option

$TTWO didn’t just have a great quarter, it also has strong future prospects.  The company’s got a couple more major titles coming out soon.  Plus, management has approved an additional share buyback.

That’s why I believe buying a longer-term $TTWO call is in order.  The January 2016 30 calls are trading around $2.25.  That’s not very expensive for a call with over six months of time value and just about $1.50 to go to be in-the-money.

Yours in Profit,

Gordon Lewis

Note:  Gordon Lewis has been trading options for more than 15 years and he now writes and edits for Optionstradingresearch.com.  You can sign up for the newsletter and get a free research report. We are your go-to source for top notch options trading research.

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Category: Call Or Put Options?

About the Author ()

Gordon Lewis is the Chief Investment Strategist and editor for the popular daily newsletter – Options Trading Research. He’s also editor of our dynamic theme-based options trading service, Advanced Options Adviser, and one of the key analysts behind the highly successful Options Trading Wire.

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