BofA-Merrill Lynch Sees Better Days for Activision Blizzard Stock

Options traders are bullish on ATVI stock, too

Jul 25, 2019 at 9:13 AM
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BofA-Merrill Lynch upgraded Activision Blizzard, Inc. (NASDAQ:ATVI) stock to "buy" from "neutral," and boosted its price target to $56 from $54 -- a nearly 20% premium to last night's close at $46.86. The brokerage firm said ATVI stock is on the "verge of inflection," and noted its bullish outlook is for the "longer-duration investor."

In reaction, ATVI stock is trading up 2% in electronic trading, set to open near the high end of its recent range. More specifically, the shares have been chopping between $42 and $49 since mid-March, and are hovering near the $47.80 per-share mark ahead of the bell. Longer-term, the equity is virtually flat on a year-to-date basis, with recent resistance emerging at its 180-day moving average.

Options traders have been eyeing more upside for ATVI stock, too. At the International Securities Exchange (ISE), Cboe Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX), the equity's 10-day call/put volume ratio of 3.28 ranks in the 78th annual percentile, meaning calls have been bought to open over puts at an accelerated clip.

In the front-month series of options, the August 47.50 strike is home to peak call open interest of 9,844 contracts. Data from the major options exchanges confirms notable buy-to-open activity here, indicating speculators expect ATVI to break out above $47.50 by expiration at the close on Friday, Aug. 16 -- a time frame that includes Activision Blizzard's early August earnings report.

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