No Games With Electronic Arts Option Buy

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Options trading investors might find this large trade in Electronic Arts (NASDAQ: ERTS) interesting. The stock has been consolidating after a big move, and an investor wanted more time to ride the upside.

OptionMONSTER’s Heat Seeker tracking system detected a surge of call activity in the video-game company, known for titles such as “FIFA” and “Madden: NFL.” An existing long position in about 55,000 ERTS March 20 Calls was apparently sold for 4 cents, and 25,000 ERTS January 22.50 Calls were purchased for $1.03. Total ERTS option volume was 12 times the daily average.

The transaction cost $2.355 million and will provide an additional nine months to profit from a push higher. The trader had to pay much more for the longer-dated calls, so he or she cut the size of the position roughly in half.

The timing is important because the March contracts will lose their value at an accelerating pace as expiration approaches on Friday. That would reduce the capital the investor could recover by selling those calls.

ERTS fell .56% to $18.44 in afternoon trading. It’s up 18% since the beginning of last month after a strong earnings report and the introduction of a stock buyback. The shares have been edging lower during the last three weeks.

The next scheduled event that could potentially impact the company is an appearance at the Lazard Capital Markets Technology & Media Conference at 11:30 a.m. ET on Tuesday.


Article printed from InvestorPlace Media, https://investorplace.com/2011/03/no-games-with-electronic-arts-option-buy-ert/.

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