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Option Brief: Zynga Inc (NASDAQ:ZNGA) has received a healthy amount of positive analyst attention today following its stronger-than-expected showing in the earnings confessional this morning. Technically, the shares have responded in a big way, too -- currently up over 8% to $3.82 after earlier notching an annual high of $4.05. Meanwhile, from an options trading perspective, volume has surged to nearly three times the typical intraday amount.
Most active by a small margin is ZNGA's weekly 11/1 4-strike call, which has witnessed more than 10,400 contracts cross the tape. The vast majority of the calls traded at the ask price, indicating they were purchased. Plus, open interest at the strike was docked at 1,926 contracts heading into the session, so this action appears to be of the buy-to-open sort, even though implied volatility at the strike has plummeted 64.1 percentage points -- likely the result of dissipating pre-earnings uncertainty.
By buying the calls, today's speculators are signaling an expectation that ZNGA will continue its year-to-date run higher, during which the shares have tacked on over 60%. Specifically, the traders are looking for the gaming concern to topple the $4 mark again by the closing bell on Nov. 1, when the weekly options expire.
Alternatively, it's possible that the aforementioned individuals are seeking protection for their short stock positions. During the past two reporting periods, Zynga Inc's (NASDAQ:ZNGA) short interest level expanded by a brow-raising 51.4%, and now makes up nearly 6% of the equity's outstanding float.