Big move seen in Activision Blizzard

David Russell (david.russell@optionmonster.com)

Higher or lower, one investor expects a move when Activision Blizzard reports earnings this week.

optionMONSTER's tracking systems detected the purchase of 6,500 June 16 calls for $0.30 in volume well above the previous open interest of 2,353 contracts. Less than a minute later a large block of ATVI shares was sold, indicating that the overall trade is a delta-neutral strategy.

Being long calls and short stock makes the investor directionally agnostic on the stock. The purpose of the trade is to profit from increased volatility in the video-game maker, which would drive up the value of the options. (See our Education section)

It's interesting to see such a bet before Wednesday afternoon's earnings report because volatility normally drops after results come out. The use of the June contracts reflects a belief that the stock will remain active in subsequent months.

ATVI is down 1.25 percent to $14.99 in early afternoon trading but is up more than 40 percent so far this year. Sentiment toward the name has been recovering lately after a long period of underperformance, with earnings beating estimates for at least four straight quarters.

Total option volume is more than quadruple the daily average so far today.


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