Saturday, June 9, 2007

Take Two (TTWO)

While I didn't post the put activity my options screener found on Friday since it's hard to discern whether put buys are hedging, or engaging in all out bearish speculations, a few things did pop out. One of them was the options activity in the puts of Take Two (TTWO), a video game software maker. My screener picked up volume of more than 37,000 contracts in the September 22.5 puts, and then on closer inspection of the entire options chain, there was volume of 37,000 contracts on the June 22.5 puts. Just thought I'd mention it as I am not planning to take a position going into earnings at this time since playing earnings is not just a matter of getting it right vs estimates, but also getting it right on sentiment. The options crowd has been loaded for bear where TTWO is concerned and thus far that's worked since the stock has deteriorated in recent weeks and put volume in particular is off the scales. But that gets me to thinking that buying puts is just too obvious and perhaps the easiest way to lose money since the issue is how much lower will TTWO go amid shareholder activist rumblings. Certainly Carl Ichan's departure from the stock in mid-May was a big blow to expectations of a takeout. Since this is a quick Saturday afternoon post as I get ready to jump into the car to have dinner up at my favorite ribs place in Manchester, VT (Laney's), I won't even get into a discussion about the games market and sentiment going forward there.

The 37k volume on those two June 22.5 strikes and what looks like a huge bear spread is intriguing and something to watch on Monday ahead of the company's earnings Monday evening.

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