Bullish play targets Activision Blizzard

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Activision Blizzard has been slowly grinding higher, and now the bulls are positioning for it to blast off.

optionMONSTER's Heat Seeker tracking system detected the purchase of 10,000 August 13 calls for $0.43 and the sale of an equal number of August 10 puts for $0.12. They also sold 20,000 August 15 calls for $0.07. Volume was more than triple the open interest in all three strikes.

The trade cost $0.12 and will earn a maximum profit of 1,566 percent if the video-game maker closes at $15 on expiration. Gains will erode above that level and turn to losses over $17, and there is downside risk because of the short puts.

ATVI, which slipped 0.16 percent to $12.25 yesterday, has been inching its way up for the last two years. Its 200-day moving average is now rising, and shares are finding support at higher levels. That could make some chart watchers believe tha an uptrend is taking shape.

A lack of exciting new titles has dampened sentiment in the industry overall, and some investors recently doubled their money betting against rival Electronic Arts . ATVI's last earnings report, however, beat expectations.

Yesterday's bullish three-way transaction included elements of a combination trade and a ratio spread . (See our Education section)

Total option volume was 25 times greater than average in the 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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