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Bulls bet GameStop will keep running

David Russell (david.russell@optionmonster.com)

GameStop has been fighting its way back from the dead, and the bulls apparently think that it still has room to run.

optionMONSTER's Heat Seeker monitoring program detected the purchase of 2,000 June 32 calls for $2.44. Volume was 19 times open interest at the strike, indicating that new money was put to work in the trade.

Owning calls locks in the price where investors can buy shares in the video-game retailer, which has doubled since August. That can result in some nice leverage if they keep climbing, while limiting the amount of money that will be lost if they decline. (See our Education section for more on how options can be used to manage risk.)

GME is up 0.65 percent to $32.51 in afternoon trading. The stock was weak for years amid pessimism that the company would be unable to survive as game sales shifted online and away from brick-and-mortar stores. But then a big short squeeze kicked in last summer after it touched its lowest level since early 2006. Earnings have also mostly been strong and valuations are low.

The date of the next report hasn't yet been announced, but 2012's calendar suggests it will occur in mid-May. Those June 32s would stand to profit if the numbers are good and the stock rallies.

Total option volume is still below average in GME today, but calls outnumber puts by more than 7 to 1.

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