DreamWorks Animation attracted bullish option activity after
reports that it will enter a joint venture with two Chinese media
The studio does not usually see much option trading, but yesterday
our Heat Seeker detected more than 3,000 March 20 calls bought
against open interest of 1,944 contracts. Most of them traded for
$0.50 to $0.70.
such as these lock in the price that traders must pay to buy
shares. These options can provide significant leverage if their
underlying stock moves higher, but they will expire worthless if
the shares fail to rally. (See our
DWA rose 4.64 percent yesterday to $19.17 as the broader market
fell. The stock began the year trading just pennies above its
52-week low of $16.34 and is still down 50 percent from its high of
$28.90 reached last March.
Total volume in the name reached 4,436 options yesterday, more than
13 times its daily average. All but 45 of those contracts were
calls, a reflection of the session's bullish sentiment.
For the options purchased yesterday to turn a profit, DWA would
need to gain roughly 7.5 percent by the time they expire in on
March 16. The company is scheduled to report earnings on Feb. 28
after the bell.
reported yesterday morning that DreamWorks will build a studio in
Shanghai as part of a deal with the state-run China Media Capital
and Shanghai Media Group. The facility will be used to develop
television, movie, and live productions for the Chinese market,
according to the report.
(A version of this post appeared on