OptionsHouse

Options Trading News

March 18, 2010  Thu 12:33 PM CT

ATVI: SEE CHART GET CHAIN FIND STRATEGIES

Activision Blizzard is running to a new four-month high, and one large trader is betting on a continued rally.

optionMONSTER's Heat Seeker tracking system detected the purchase of 25,587 January 15 calls for $0.50 and the sale of a matching number of January 10 puts for $0.62, resulting in a credit of $0.12. The trade pushed overall option volume in the name to almost nine times greater than average.

ATVI ChartATVI rose 3.14 percent to $12.16 in afternoon trading and is up 11 percent in the last month. The videogame maker gapped higher after reporting better-than-expected results on Feb. 11 and announcing that it would start paying dividends.

The shares have climbed steadily since, gliding through potential resistance levels at $11 and $12 while pausing for only three days at its 200-day moving average.

The gains have been accompanied by bullish news in the game sector from such companies as NetEase and ZongKhong. UBS raised its estimates on ATVI yesterday, and call buyers targeted rival Electronic Arts.

Today's options trade is designed to generate huge gains from a continued move higher. It will make money if ATVI climbs above $15 by expiration and lose money below $10. Because the trader received a credit rather than paying a debit, any profits earned would represent an infinite total return.

The strategy, known as a bullish risk reversal, mimics a long position in the stock.

(Chart courtesy of tradeMONSTER)

Share this article with your friends


Related Stories

ATVI

More bullish plays in Activision Blizzard

May 18, 2016

The game developer has seen upside option activity on several occasions recently, and it attracted two more bullish trades yesterday.

ATVI

Investor wants more in Activision Blizzard

May 16, 2016

The video-game developer has been ripping higher on strong quarterly results, and one large trader is rolling a bullish position forward for more gains.

OptionsHouse

Premium Services

Education & Strategy

Timing the Trade

Both break outs and a break downs need to have a couple things happen before it is considered a confirmed break out or break down by technical definition!  The only problem is that in today's market where things move much more quicker than they did just a few years ago, two days could wind up being the majority of the expected movement, if not the whole movement.

View more education articles »