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Bulls play for more in GameStop

Paul Taggart | Bloomberg | Getty Images

A large trader is looking for more gains in GameStop despite a downgrade by Credit Suisse.

OptionMonster's tracking systems detected the sale of 5,000 September 45 calls for $6.33 and the purchase of 5,000 September 50 calls for $3.43 on Friday. Volume was below the previous open interest in the 45s but above it in the 50s, indicating that the trader rolled a position to the higher strike.

The new calls, which lock in a $45 purchase price for the stock, provide a less expensive way to play for gains than buying shares outright. Adjusting the position on Friday let the trader collect $2.90 of premium from the options while potentially profiting from further rallies in the stock.

Gamestop rose 0.82 percent to end the session at $50.39. The game retailer's stock has doubled so far this year, breaking through recent resistance at the $44 level last week while seeing other bullish call buying along the way.

Credit Suisse's downgrade to "neutral" from "outperform" was based on valuation, but the firm actually raised its price target on the name to $50 from $44. GameStop is scheduled to report second-quarter earnings on Aug. 22.

Total option volume was more than twice the daily average in the session, with calls outnumbering puts by a bullish 4-to-1 ratio.

—By CNBC Contributor Mike Yamamoto

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Disclosures:

Mike Yamamoto is managing editor for OptionMonster. Yamamoto has no positions in GME.

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