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Trade of the Day: Gamestop (GME)

GME at an attractive entry point


Gamestop (GME) is the nation’s leading source of new and used video games. It saw a 2% pop last week in the runup to the release of the Sony (SNE) PlayStation 4, and pulled back this Monday for a favorable entry.

There was a fear at one point that mobile games would kill the console, but as I’ve noted in the past, the industry has received a new breath of life from games with an incredible new level of realism, artistry and storytelling. Thanks to the onslaught of hot new titles and new consoles like the PS4 and Microsoft (MSFT) Xbox One, the video game industry is enjoying a renaissance lately. GME is the kind of heavily shorted stock that can perform well as the price is “squeezed” higher in a Wall Street environment in which fund managers are struggling to catch up.

Recommendation: Buy GME for a $62.25 target (set up to sell half there).  Call options here are expensive, but could become attractive if the overall market pulls back.

Jon Markman operates the investment firm Markman Capital Insights. He also writes a daily trading newsletter, Trader’s Advantage, and CounterPoint Options, a service geared towards helping individual traders make steady, consistent profits with the VIX.  Follow Jon Markman at Google+.

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