Upside option position racked up huge gains in Take-Two Interactive Software today, thanks to strong quarterly results.
Back on May 22, Investitute’s tracking systems detected the purchase of 1,600 September $70 calls for $5.10 as part of a bullish spread with shares at $68.98. Open interest in the strike was only 292 contracts before the trade appeared, showing that it was a new position.
Today those calls traded for as much as $20, a gain of nearly 300 percent. The stock rallied 31 percent in the same period, a big move but not nearly as large as that of the options on a relative basis.
Long calls lock in the price where the stock can be purchased, gaining with a rally and providing leverage to the underlying shares. The contracts can quickly lose value if the stock stalls or pulls back but also carry less risk than owning the shares themselves.
TTWO jumped 12.22 percent to $89.09 today. The game developer, blew past earnings and revenue estimates after the market closed yesterday. The company, whose titles include the “Grand Theft Auto” franchise, also raised its full-year outlook.