In the lead-up to GameStop's (NYSE:GME) third-quarter earnings report, investors are showing renewed interest in the company's stocks, betting on a significant rise.

What Happened: Traders are heavily investing in deep out-of-the-money call options for GameStop stock. They are speculating that the stock price will surge about 28% from current levels to above $20 before Dec. 8, Business Insider reported.

The call options tied to GameStop expiring on Dec. 8 have seen increased trading volume recently, with over 15,000 contracts open as of Wednesday. More than 4,000 of these contracts traded hands during the first 30 minutes of Wednesday's trading session.

Why It Matters: GameStop's earnings report is due after the market closes on Dec. 6 and traders are hoping that it will trigger a spike in the stock price. The company's stock has already seen a surge this week, with shares jumping 17% on Wednesday and 13% on Tuesday, marking a two-day gain of 32%.

The increased trading activity in the $20 call options has been primarily driven by small block trades, indicating that retail investors, rather than institutions, are fueling the buying activity.

Since reaching its peak in January 2021, GameStop's stock has declined by 87%. However, investors remain hopeful of a turnaround led by the company's current Chairman and CEO, Ryan Cohen.

Regardless of whether the recent surge continues, GameStop's stock is expected to remain volatile in either direction as the company prepares to release its earnings report.