How Zynga Inc (ZNGA) Could Extend Today's Rally

Options traders have been betting bullishly on Zynga Inc (ZNGA)

by Josh Selway

Published on Mar 2, 2016 at 10:52 AM
Updated on Jun 24, 2020 at 10:16 AM

"Words With Friends" creator Zynga Inc (NASDAQ:ZNGA) has bounced back significantly since the stock hit an all-time low of $1.78 last month, gaining 25%. This includes today's 2.5% pop, following news the social gaming company has named Frank Gibeau, a former Electronic Arts Inc. (NASDAQ:EA) executive, its new CEO. ZNGA was last seen at $2.22, after being halted earlier by its descending 60-day moving average -- a former layer of support. 

160302ZNGA

In early options trading, call volume is outpacing put volume, which isn't exactly surprising. More than seven ZNGA calls have been bought to open for every put during the past two weeks at the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX). Plus, the stock's Schaeffer's put/call open interest ratio (SOIR) of 0.23 arrives in the low 6th percentile of its annual range, indicating an unusually strong call-bias among short-term options traders. 

By contrast, most analysts have taken a pessimistic outlook, with eight of the 11 covering ZNGA saying it's a "hold" or "sell." As such, Zynga Inc (NASDAQ:ZNGA) could benefit from a rare round of bullish analyst attention if the shares can overcome their 60-day trendline and extend today's rally. 

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