Options Traders Play Video Game Stock After Earnings

The video game maker is under scrutiny for its workplace environment

Deputy Editor
Aug 4, 2021 at 10:05 AM
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Activision Blizzard Inc (NASDAQ:ATVI) is no stranger to the spotlight, but recently that spotlight is more akin to the lighting of an interrogation room. Amid a lawsuit surrounding the company's toxic workplace, a number of executives have stepped down from their positions. And now, WilmerHale, the law firm hired to review Activision Blizzard's policies and procedures, is coming under fire for its history of union-busting, and workers from Activision, Blizzard, and other King's studios have formed a new coalition called ABK Workers Alliance in response.

All of this drama is unfolding amid earnings season. The video game maker announced second-quarter profits and revenue that beat Wall Street's estimates after yesterday's close, and provided an upbeat forecast while citing strong strong demand for its "Candy Crush" and "Call of Duty" franchises. In response, the stock was last seen 2.9% higher to trade at $81.99.

A number of bear notes rolled in after the event, including one from MKM Partners in the form of a $12 price-target cut to $108 from $120. The shift from analysts today isn't a surprise considering the majority of analysts were bullish on ATVI coming into today, and the stock is down 12% in 2021. All 18 call the equity a "buy" or better, while the 12-month consensus price target of $117 is a hefty 38.1% premium to last night's close.

Today's options pits are full of speculation from both sides of the aisle. So far, 17,000 calls and 8,358 puts have crossed the tape, total volume that's four times the intraday average. Most popular is the weekly 8/6 85-strike call, followed by the 75-strike put from the same series.

Yesterday, ATVI fell to its lowest trading level since Nov. 30. Despite today's mini-rally, the shares breached their 320-day moving average last week, and have taken a 14% haircut in the last month.  

 

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