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Saturday, February 24, 2024

Something’s Up at GTech – GTK

My options radar went of on GTech Holdings.

  • Charts are up
  • Insiders held a buying party on 10/28
  • December Calls went nuts at both the $30 and $32.50 level

Lots of March $37.50s were sold as well with NO put buying on the other side.

Earnings are coming up in December and they were a little off last quarter so I’m speculating that last quarter was some kind of abberation when income dropped 3%. Since the company sells lottery systems we know they aren’t going anywhere.

The company took a dive down from $34.90 on 9/12 when there was an acquisition rumor but it has since consolidated right on the 50 dma since 10/7. Having just crossed to the upside of that line, I would have to agree with Friday’s buyers that the December $30s look very attractive with a .75 premium!

If you are more conservative, I would say that buying the stock today for $32.10 and selling the Dec $32.50 call for $1.20 gives you a very nice 4% return over 30 days. Since your break even is lower ($31.30) than all but 3 closes since September 12th, this is a nice probability trade.

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