Friday, May 20, 2011

GameStop (GME) - Vol Pops, Stock Rises, Calendar Opens

GME is trading $27.83, up 1.9% with IV30™ up 10.6%. The LIVEVOL® Pro Summary is below.


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GameStop Corp. (GameStop) is a retailer of video game products and personal computer (PC) entertainment software.

The company has traded over 23,000 contracts on total daily average option volume of just 6,989. Jun 28 calls have traded just under 7,500x. The largest trade was: GME jun 28 c cust paid up to .83 for 5K...crossed. Color from my good friend Mike Bristow of V-trader Group. Sup, Mike? The Stats Tab and Day's biggest trades snapshots are included (below).

The Options Tab (below) illustrates that the Jun 28 calls and puts are mostly opening (compare OI to trade size). When looking down the option chain for GME, I don't see any OI larger than 5,500 until we get to the '12 options, so this trade is large.

The Skew Tab snap (below) illustrates the vols by strike by month.

We can see those May 28 calls are still bid from the price movement today -- those are 2.5 hour options -- pure gamma. I've also included the GME skew tab with May taken out so we can see the Jun/Jul diff.

We can more clearly see the vol diff between the Jun and Jul 28 lines here, with May taken out. FULL DISCLOSURE: I am short the May 28 calls and long the Jul 28 calls. The positions will obviously change soon, but as of this writing, that's what I hold. Please DO NOT TAKE that as advice. Prices have changed from my trades, anyway.

Finally, the Charts Tab (6 months) is below. The top portion is the stock price, the bottom is the vol (IV30™ - red vs HV20 - blue vs HV180 - pink).

We can see the stock climbed after an initial ugly drop off of earnings. Today it's popping again with the IV30™ super elevated relative to both the short-term and long-term historical vols (HV20 and HV180). Actually, for the last several months, the implied has tended to trade above the historical -- so the real question is, why am I long vega?... Lol...

This is trade analysis, not a recommendation.

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