Warcraft Options Play

Been playing World of Warcraft for about a month now and as far as MMORPGs (Massively Multiplayer Online Role Playing Games) are concerned, this one’s a winner. Unlike most other MMORPGs, this one is very well thought out. It’s easy to play but difficult to master – a trait all great games possess. Not since Ultima Online has any MMORPG gotten my seal of approval.

Unfortunately, the game’s developer, Blizzard Entertainments, is not a listed company. In fact, its a subsidiary of Vivendi, a french media company. There is, however, a NASDAQ listed company call The9.com (NCTY) that you can buy if you think World of Warcraft will still be a smash hit for the next 2 to 3 years. Or rather, a smash hit in China. You see, The9.com is a Chinese internet gaming company which is the sole distributor of World of Warcraft in China. In barely one year, the number of WOW players in mainland China has grown to 1.5 million! Another reason why I think the Chinese will love to play such games is that I believe people living in overpopulated areas, like in China and Korea, will find such games a great escape into another world.

NCTY is poised to announce its 2006 Q3 earnings on 15 Nov. Shares are currently $24 a piece. The year high was $30 but was down recently due to some server outage issues with the game. My guess is that with explosive growth comes such problems. These are problems you wish to have if you are a business.

Bought some NOV 25 call option for $0.60 a piece to play the earnings. Not cheap and definitely speculative.

Updated 13 Nov ‘06: 2 more days until earnings are announced. Came across an article mentioning that the number of concurrent players of the WOW game did not increase during this quarter. Makes me wonder whether I should purchase a NOV 25 put option to implement a long straddle strategy instead.