Options Trading News

October 26, 2012  Fri 9:56 AM CT

Shares of Activision Blizzard hit a new 52-week low today, and one trader believes that more downside is possible for the struggling videogame maker.

More than 23,000 ATVI options trade, compared to a daily average of 3,200. Only 2,000 of the day's action is in the calls, and a single print of 14,000 January 10 puts make up most of the action.

The puts traded for $0.25, the listed ask price at the time, indicating that they were bought. The previous open interest in the strike was 2,633 contracts, so this is a new position.

Our systems also detected some big ATVI stock prints changing hands, as two blocks of 100,000 shares traded for $11 and $11.015 about 20 minutes before the puts, so the options could be related to the stock. The puts could also be hedging against an existing position in ATVI shares. (See our Education section)

ATVI is down 1.54 percent to $10.89. Shares were above $12 a month ago.
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The covered call and unhedged risk

I have written a few things on the Covered Call Strategy over the last two weeks. Please understand that those two previous articles plus this one do not constitute a proper, fully in-depth lesson on the Covered Call Strategy like we have in our classes at Option Monster Education. I have picked out a few topics that I believe were worth noting and today I am going to add the final one.

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