GameStop's High Option Premiums Are Popular with Income Investors

GameStop (GS) reported surprise profits and positive free cash flow for Q4 and 2022 on March 21, including the first profits it has had in 2 years. This has pushed up GME stock over 40% and it is still at these levels, closing at $22.40 on April 7. This has led to very high option premiums that are popular with income investors.

I discussed the company's earnings and positive free cash flow (FCF) results in my Barchart article on March 26, “GameStop's Surprise Profits And Huge FCF Causes Unusual Options Activity.” For example, the Q4 net income was $48.2 million, compared to a net loss of $147.5 million for the prior year’s fourth quarter. In addition, I pointed out that its Q4 FCF was $326.6 million. That actually led to an increase in its cash balance, rising by 33% or $349 million during the last quarter.