Electronic Arts Inc. (EA)

[TFMG]

Are all the skeletons out of the closet in EA

It is hard to imagine how sentiment could get much worse in EA and the entire gaming space. The last earnings report was a roller-coaster ride of heavy selling then heavy buying, bad news then good news. We think that the stock has finally been flushed out, investors who remain have very low expectations. Tuesdays earnings report may be the opportunity EA needs to readdress this negativity and put the analysts and investors in a better frame of mind. We have the opinion that anything positive in the earnings could give the price a very strong bounce to above $100. It is a risky trade but will hedge with puts.