Monthly Cash Machine Newsletter, Sunday, 02/06/2005 03:54:33 PM ET
HAVING TROUBLE PRINTING?
TTWO - Take-Two Interactive Software $38.54
Take-Two Interactive Software (NASDAQ:TTWO) is a global publisher of interactive software games designed for personal computers, and video game consoles and handheld platforms manufactured by Sony, Microsoft and Nintendo. Through its Rockstar publishing subsidiary, Take-Two endeavors to successfully create new, brands and sequels to existing brands with broad consumer appeal. The company also distribute its products, as well as third-party software, hardware and accessories to retail outlets in North America through Jack of All Games subsidiary. Customers in North America include Best Buy, Blockbuster, Circuit City, Electronics Boutique, GameStop, Target, Toys R Us, Wal-Mart, and other national and regional drug store, supermarket and discount store chains and specialty retailers.
TTWO has been in "rally mode" for the past week, soaring to a 14-month high in the wake of a long-term, exclusive video game licensing agreement with Major League Baseball and some of its affiliates. In addition, investors were apparently happy with a decision by the company's software president, Paul Eibeler, to add the title of CEO to his business card. Although the volume supporting the upside activity has been less than outstanding, the issue is now comfortably above a 5-month trading range near $34 and the top (near $35.50) of that pattern should form technical support for any future consolidation. The only potential "bump in the road" is the potential volatility associated with the company's quarterly earnings report, which will likely be posted in mid-March. Traders who enter the position should monitor the company's website for an announcement of the release date in the coming weeks.
PLAY (less conservative - bullish/credit spread):
BUY PUT MAR-32.50 TUO-OZ OI=2268 ASK=$0.35
SELL PUT MAR-35.00 TUO-OG OI=346 BID=$0.65
INITIAL "NET-CREDIT" TARGET = $0.35-$0.45
POTENTIAL PROFIT (X 5 contracts) = $175
RETURN ON INVESTMENT (max) = 15%
COST BASIS = $34.65
LOSS-LIMIT/EXIT POINT = $36.00 (cons) - $35.25 (aggr)