ATVI Closes in on Record High Ahead of Earnings

The shares of Activision Blizzard Inc (NASDAQ:ATVI) are up 1.7% at $84.03 at last check, earlier hitting a fresh record high of $84.75. With support from the 20-day moving average, the equity is up 41.2% year-to-date. This positive price action comes just one day ahead of its second-quarter earnings report, which is due out after the close tomorrow. 

Analysts are bullish on ATVI, with 21 out of the 25 in coverage at a "buy" or better rating. and just three at a tepid "hold" and one at a "strong sell." Meanwhile, the 12-month consensus price target of $83.93 is just below current levels, leaving plenty of room for a round of post-earnings price-target hikes -- should the climate call for it.

This sentiment is echoed in the options pits as well. In the last 10 weeks, 5.22 calls were picked up for every put at the International Securities Exchange (ISE), Cboe Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX). This ratio sits higher than 94% of all other readings from the past year, implying a healthier-than-usual appetite for long calls. 

Today's options are of a similar trend. So far, 70,000 calls and 17,000 puts have crossed the tape so far -- three times what's typically seen. Most popular are the weekly 8/7 90- and 85-strike calls, with positions being opened at both. 

A look back reveals that only three of the past eight sessions had a positive post-earnings response. The security averaged a next-day return of 4.9%, regardless of direction. This time around, the options market is pricing in a much bigger move of 13.3%.