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Bullish Betting Accelerates on Zynga

ZNGA fans continue to pick up February 3 calls

by 1/8/2013 10:13 AM
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Options traders continue to wax optimistic on Zynga Inc (NASDAQ:ZNGA - 2.55), which has advanced more than 8% so far in 2013. During the course of Monday's session, the social gaming guru saw about 43,000 calls change hands -- more than twice its average daily call volume, and about five times the number of puts exchanged.

Attracting notable attention, once again, was the February 3 call, which saw open interest skyrocket by about 4,300 contracts overnight. Plus, roughly two-thirds of the calls changed hands at the ask price, hinting at buy-to-open activity. More specifically, the calls crossed at a volume-weighted average price (VWAP) of $0.18, meaning the buyers will profit if ZNGA topples the $3.18 level -- in territory not charted since September -- by February options expiration.

Broadening our sentiment scope, we find that option players have been picking up ZNGA calls at a faster-than-usual pace -- especially the aforementioned February 3 call, which has seen open interest soar by more than 8,000 contracts during the past five sessions. Nevertheless, the 2.50 strike remains home to peak call open interest in the back-month series, with more than 11,600 contracts outstanding.

On the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX), traders have bought to open more than eight calls for every put during the past two weeks. What's more, the equity's 10-day call/put volume ratio of 8.48 registers in the 85th percentile of its annual range, hinting at accelerated call buying of late.

In early trading, ZNGA has shed 3% to linger in the $2.55 neighborhood.


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