Markets

Activision sees blizzard of call activity

Activision Blizzard releases the potential blockbuster "Starcraft II" today, and one large trader is playing for a rally.

Our Heat Seeker tracking program detected the purchase of 8,153 February 14 calls for $0.46 and the sale of a matching number of February 10 puts for $0.47. The trade produced a credit of $0.01 and pushed volume to more than 150 times open interest in both strikes.

ATVI Chart

ATVI rose 1.53 percent to $11.91 yesterday and is up 8 percent in the last month. The shares have faced selling pressure ever since the 2008 financial panic, keeping them trapped between $10 and $13 while most other stocks have staged major rallies.

However, the earnings trend appears to be improving: ATVI popped after issuing results in November and February and then gave bullish guidance in April and May.

The new "Starcraft" title is expected to sell more than 4 million copies in the next month. The game is the sequel to a wildly popular title that has sold more than 11 million copies since 1998. Another potential catalyst is the release of second-quarter results after the bell on Aug. 5.

Yesterday's trade will simulate a long position in ATVI, making unlimited profits if it rallies above $14 by expiration and losing money below $10. The strategy, known as a bullish combination, resembled another trade implemented in March.

Overall options volume in the name was seven times greater than average in the session.

(Chart courtesy of tradeMONSTER)

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

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


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

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