Year to date US video game sales are up 11% from a year ago and analysts are expecting a record-breaking fourth quarter for the industry. Investors were concerned earlier in the year when the video game industry experienced a slight downturn. A subsequent strong sales period and the release of two new hardware platforms are breathing new life into the game industry. The top storefront video game retailer, and the company of focus in this article, is GamesStop Corp. ( GME ).
GamesStop Corp. operates over 4400 stores in the United States, Canada, Australia and Europe. The company has stores under the names GameStop and EB Games. They can also be found on the web at www.gamestop.com. An exciting new feature recently added to the company’s website allows users, for a fee, to download games directly to their PCs directly.
Video game sales are expected be buoyed this year by Sony’s (SNE) debut of the PlayStation 3 and Nintendo’s Wii. Top selling games are THQ Inc.’s (THQI) “Saint’s Row” and “Lego Star Wars II: the original trilogy” both for the Sony PlayStation. For the Nintendo Wii the top-selling game is, “Pokémon Mystery Dungeon”
An AP report on November 10th stated both hardware and video game sales are expected to rise this Christmas season ( moneycentral.com ). News of strong hardware and game sales may be an indication GameStop’s share price will rise or remain stagnant for the coming month. Let’s take a look at some of the covered calls for GamesStop Corp. this December:
| Covered Calls GAMESTOP CORP (GME) $51.74 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| OPTION | Expiration/Strike | Opt. Bid |
%Dnsd. Prot |
%If Unch. |
%If Asgnd |
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| GMELJ | 06 DEC $50.00 | $3.80 | 7.30% | 4.30% | 4.30% | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| GMELK | 06 DEC $55.00 | $1.55 | 3.00% | 3.10% | 9.60% | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
The December $50 option offers a good potential profit of over 4% with outstanding downside protection of over 7%.
How did we find this option trade? We looked at the most desirable option trades returned using PowerOptions’ SmartSearchXL search engine. This tool allows the user to set parameters so the search engine returns stocks with greater than 4% downside protection and options expiring in December. Other useful fields are: average analyst rating, percent return is assigned, stock price range, and option price. Using this method, the user can look up and down the list of returned stocks and find the stocks he/she considers the most attractive and potentially profitable. Join PowerOptions today, and you too can start reaping the benefits of the covered call investment strategy.
PowerOptions provides Internet based tools for analyzing stock options with specific search criteria and for finding potentially lucrative option income. For those seeking to execute a covered call investment strategy for their personal portfolios, PowerOptions provides an Internet based search engine for finding potentially lucrative income producing covered call options positions.
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[tags]PlayStation 3, Nintendo, Wii, Sony PlayStation, GME, Gamestop Corp., SNE, Sony Corp. ADR, THQI, THQ Inc., covered call investment strategy, covered call options, investment strategy, iron condor, option income, poweroptions, selling naked puts, stock option trading, stock options[/tags]