Take-Two Interactive Options Price In Big Earnings Reaction

TTWO options traders have been unusually bullish in recent months

Video game maker Take-Two Interactive Software, Inc. (NASDAQ:TTWO) is slated to report its fiscal fourth-quarter earnings after the market closes tomorrow, May 16. On the charts, TTWO is up roughly 20% from its recent lows near $95. Longer term, the stock has added 62% over the past year, and is within a chip-shot of its Feb. 1 record high of $129.25 -- even with today's 1.4% drop to trade at $112.84.

Digging into earnings history, TTWO has posted a positive return the day after six of the company's last eight reports. In fact, last August, the retail stock posted an impressive 12.2% gain the day after earnings. On average, the stock has swung 6.5% the day after its last eight quarterly events, regardless of direction. This time around, the options market is pricing in a 11.2% next-day move, per data from Trade-Alert.

In the options pits, TTWO call buying has been surging in recent months. Data from the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX) shows the security's 50-day call/put volume ratio at 4.04, ranking in the 87th percentile of its annual range. This suggests that calls have been bought over puts at a faster-than-usual clip during the past 10 weeks.

Analysts, have been upbeat toward Take-Two stock ahead of earnings, too, with 14 of 16 brokerages maintaining a "buy" or "strong buy" rating. Plus, the stock's average 12-month price target comes in at $130.15 -- a 15% premium to current levels.