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Most Active Options Update: Zynga Inc (ZNGA)

Bullish bets accelerate as Zynga Inc tags new high

by 2/18/2014 12:09 PM
Stocks quoted in this article:

The 20 stocks listed below have seen the highest total options volume over the course of the last 10 trading days. Names highlighted (if applicable) are new to the list since the last time the study was run, and data is courtesy of Schaeffer's Senior Quantitative Analyst Rocky White. One stock seeing notable activity among call buyers today is Zynga Inc (NASDAQ:ZNGA).


Social gaming concern Zynga is having a very good year. So far in 2014, the stock has gained more than 33% to its present perch of $5.08. By comparison, the broader S&P 500 Index (SPX) is roughly 0.5% lower so far this year. Earlier today, Zynga shares tagged $5.10, their highest point since mid-2012.

Against this backdrop, call volume is outpacing put volume by a margin of nearly 3-to-1. Most active is the February 5 call, which expires this Friday at the closing bell. A healthy portion of the volume traded here has crossed at the ask price, and implied volatility has surged more than 2.7 percentage points. Together, this suggests buy-to-open activity, which data from the International Securities Exchange (ISE) also supports.

The plays are a bet that ZNGA will continue to build on its gains through the remainder of this week. In order for today's call buyers to be in profitable territory as the options expire on Friday, ZNGA will need to be perched above breakeven of $5.12, or the strike price plus the volume-weighted average price of $0.12. This is just 2 cents north of the stock's aforementioned historical high reached earlier today.

Even with Zynga Inc (NASDAQ:ZNGA) in rally mode of late, the options crowd has been more bearishly skewed than usual. The stock's 10-day ISE, Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX) put/call volume ratio stands at 0.29. While this implies that more than three calls have been purchased to open during the last two weeks for every put, the ratio is elevated on a relative scale, as it ranks above 79% of the past year's worth of readings.


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