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Call trading popped on Zynga, Inc. (NASDAQ:ZNGA - 2.51) yesterday, as roughly 28,000 of these bullishly oriented options crossed the tape -- representing 1.93 times the stock's average daily volume. Meanwhile, only 4,259 puts changed hands, falling well short of ZNGA's typical daily put volume of more than 7,000 contracts.
Traders continue to show a strong preference for 2.50-strike calls on the gaming issue. In the January 2013 series, this strike was most active, with 16,335 contracts trading. About 90% of these crossed at the ask, suggesting a skew toward buying activity. Open interest at the January 2.50 call jumped overnight by 9,708 contracts, confirming the initiation of new bullish bets.
These options crossed the tape at a volume-weighted average price (VWAP) of $0.23, which means call buyers need ZNGA to rise above breakeven at $2.73 by the time January-dated options expire. Based on Wednesday's close at $2.51, the shares need to rally at least 8.8% over the next seven weeks.
ZNGA is down more than 73% year-to-date, but the stock is attempting a comeback on the charts. The shares closed Wednesday above their 50-day moving average, which previously hadn't been surmounted on a daily closing basis since April 2.