Bull plays upside in Activision Blizzard

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Activision Blizzard has been explosive, and traders are giving it more room to run.

optionMONSTER's Heat Seeker monitoring system detected the purchase of 55,750 September 17 calls for $1.26 and the sale of an equal number of September 19 calls for $0.30. Volume was below open interest in the 17s, which suggests an existing short position was closed and rolled to the higher strike.

The investor almost certainly owns shares in the videogame stock and had sold calls against it to earn premium. Adjusting up to the 19s let him or her the right to earn an additional $2 on their shares. They paid $0.96 for that right. (See the discussion of covered calls in our Education section for more.)

ATVI is up 3.03 percent to $17.99 in afternoon trading. The move comes just one day after the stock rallied 15 percent on a deal to buy back more than half its shares from France's Vivendi at a discount to current market prices.

Momentum has also been strong in the video-game space, beginning today's session as the seventh-best performing group of more than 100 industry subsets tracked by our proprietary researchLAB market scanner in the last week.

ATVI is scheduled to announce second-quarter results after the closing bell on Thursday, Aug. 1. Based on today's transaction, the investor wants to make sure they don't miss a rally on potentially good news. Rival Electronic Arts gapped higher on strong results last week.

Almost 130,000 contracts have traded in the name so far today, compared with 14,505 in an average session.



The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of The NASDAQ OMX Group, Inc.

Copyright © 2010 OptionMonster® Holdings, Inc. All Rights Reserved.


This article appears in: Investing , Options

Referenced Stocks: ATVI

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