Is there a second take in TTWO?

Stocks are going to make a closing high today or near it as I write this post and I can’t help but think we would be way higher if Vladimir Putin could make up his mind what he wants to do in the Ukraine.  We know what he wants to do, take a bunch of territory, but the Europeans are still threatening sanctions.  That is keeping the VIX into another elevated close and vol. futures bid.

We can fast forward to TTWO.  This jumped on my radar for activity with some news that the game maker might make movies out of GTA.  The stock jumped a buck and tons of action came pouring into the options.  Never mind that the company still has to make money on the movies and any revenue will be a year away.  I suppose it is positive but the jump in IV today looks kind of silly.  The buyers for sure pushed it there but I doubt if it will hold up.



With the news out I don’t see how the IV will maintain this level.  At the same time I don’t want a too short upside position because there could be legs to the story.  The idea is to place the risk somewhere to sell the volatility.  I like the idea of placing the risk around the 22 level.

Livevol X (r)

The Trade

Take the jump in TTWO with the IV and create a 1 x 2 put spread in Oct.  Buy 1 and sell 2 and be ready to take the stock lower.  Several strikes set up for decent credits.  Could be a nice winner if TTWO settles a bit when the hype fades.  Selling the OTM puts is not a bad idea either if one was inclined but do not forget the risk in any short put position.  

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