When you tap GameStop earnings, options traders bet on muted moves – Texas News Today

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File Photo: The GameStop Store is located in the Jackson Heights area of ​​New York City, NY, USA. Taken on January 27, 2021. The photo was taken on January 27, 2021.Reuters / Nick Jiminsky

September 8, 2021

By Saqib Iqbal Ahmed

New York (Reuters)-Options traders are relatively restrained in GameStop Inc stock movements, especially in earnings reports, as the company that sparked the so-called meme stock phenomenon is preparing to report quarterly results on Wednesday. I expect.

Traders are pricing a 14% volatility in GameStop’s stock by Friday, according to options pricing that expires on weekends. By comparison, the share of video game retailers moved about 30% the day after each of the last two revenue reports.

As GameStop’s stock movements are becoming more difficult on a daily basis, it is expected that stock price fluctuations will be smaller. The company’s stock had an average daily movement of about 3.6% in either direction last month, compared to an average daily movement of 12% in the first half of the year.

One of the reasons for the cut is that the company’s stock, which is about $ 200 compared to about $ 16 in early January, is appealing to investors looking to get into cheaper stock in anticipation of a big backlash. It may be fading. Henry Schwartz, Head of Product Intelligence at Cboe, said.

Recent meme stocks that rebounded last month ranged from about $ 8 in mid-August to $ 59.69 in late August at Support.com and from about $ 2.50 in late August to $ 7.89 earlier this month.

“GameStop has been hidden by many other names,” Schwartz said.

GameStop increased by about 950% annually and decreased by 8% this quarter. According to Trade Alert data, the average monthly options trading volume for this stock is about 111,000, down from about 820,000 in early February. Similarly, the average daily volume of this stock is 3.3 million, down from about 77 million in early February.

Based in Grapevine, Texas, the company is expected to see higher second-quarter revenue on Wednesday as its in-store business is slowly recovering.

Investors will also look for comments on future plans as the company drives e-commerce growth. Core stock supporters of forums such as Reddit’s WallStreetBets are famously promising to hold stocks until “go to the moon.”

Indeed, looking at implied volatility (an option-based measure of the amount traders expect to move stocks), some people bet on stocks and snap four-quarters in a row of post-earning declines. You can see that it is doing.

According to Refinitiv data, implied volatility on Friday-implied volatility that occurs when stock prices rise by 15% was 230% on Tuesday afternoon, but 210 of puts that occur when stock prices fall by 15%. %was.

Cole conveys the right to buy shares at a fixed price in the future and is usually bought by a bullish investor, but Put offers the right to sell shares at a future set price.

Brian Overby, Senior Options Analyst at Ally Invest, said:

(Report by Saqib Iqbal Ahmed, New York, edited by Ira Iosebashvili and Matthew Lewis)

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