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Zynga Inc (ZNGA): New Annual High Encourages Call Players

ZNGA's December 4 call is a popular bet among bulls today

by 11/22/2013 2:57 PM
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Option Brief: Zynga Inc (NASDAQ:ZNGA) ran to a new 52-week peak of $4.55 earlier, before pulling back to its present perch at $4.39. In the stock's options pits, the December 4 call is the most active strike, where the majority of the 13,311 contracts traded have done so on the ask side. Implied volatility is on the rise -- hinting at buy-to-open activity -- as traders forecast a move back toward annual-high territory over the next several weeks.

Widening the sentiment scope reveals a bearishly skewed bias has been directed toward ZNGA in recent months, even though the equity has roughly doubled in value year-over-year. At the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX), Zynga's 50-day put/call volume ratio of 0.25 ranks in the 90th percentile of its annual range. Simply stated, puts have been bought to open (relative to calls) with more rapidity just 10% of the time within the past year.

In the front-month series, this put-skewed slant has translated into peak levels of open interest at the December 4 strike. Going forward, Zynga Inc (NASDAQ:ZNGA) could find options-related support at this underfoot area, as the nearly 57,000 contracts that reside here unwind ahead of expiration.


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