ATVI stock tends to rally off its 40-day moving average
Activision Blizzard, Inc (NASDAQ:ATVI) stock is up nearly 60% year-to-date, and last week reached a new record high of $61.57, but has since pulled back amid the broader tech stock swoon. However, ATVI stock has an excellent track record after tests of its 40-day moving average, and near-term options traders betting on a bounce for Activision shares can do so at a relative discount.
ATVI stock is now within one standard deviation of its 40-day moving average -- a historical "buy" signal. According to Schaeffer's Senior Quantitative Analyst Rocky White, after ATVI's last 12 pullbacks to its 40-day moving average, the stock posted an average one-week return of 2.01%, and was higher 67% of the time. Extending this data out to on month, the average post-signal return is 3.48%, and positive 73% of the time.
Despite Activision's long-term rally, the stock boasts a Schaeffer's put/call open interest ratio (SOIR) of 1.20, ranking in the 77th percentile of its annual range. This indicates near-term
options traders are much more put-heavy than usual right now. However, peak open interest at the July 57.50 put could act as an added layer of options-related support for ATVI stock in the near term, with nearly 15,000 contracts outstanding.
Meanwhile,
short-term option prices for ATVI are currently very attractive. This is according to ATVI's Schaeffer's Volatility Index (SVI) of 28%, which stands higher than just 21% of all other readings for the year. In addition, its Schaeffer's Volatility Scorecard (SVS) sits at a lofty 96, implying that Activision Blizzard stock has exceeded options traders' volatility expectations during the past year.