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Activision Blizzard, Inc. (ATVI) Call Options Heat Up Amid 'Call of Duty' Buzz

"Call of Duty" buzz has lifted Activision Blizzard, Inc. (NASDAQ:ATVI) to all-time highs

Sep 2, 2016 at 11:51 AM
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Video game maker Activision Blizzard, Inc. (NASDAQ:ATVI) is up 2% today at $43.01, and earlier hit a record high of $43.10, thanks to buzz surrounding what the company called the "largest fan event in ['Call of Duty'] history." Thousands of fans are piling into The Forum in Los Angeles today for Call of Duty XP, a sold-out, multi-day event that'll feature the premiere of the next game in the video game franchise. Not only is the buzz lifting ATVI stock, but it also has options traders betting on more upside in the near term. 

At last check, ATVI calls were trading at more than double the rate of puts. Much of the volume has taken place at the weekly 9/2 42.50-strike call, where traders may be closing now in-the-money positions ahead of tonight's expiration. Close behind is the weekly 9/9 43-strike call, which option bulls appear to be buying to open in hopes of the video game stock running higher through next Friday's close, when the contracts expire. 

This preference for ATVI calls is nothing new, as traders at the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX) have been rushing to place bullish bets over the past two weeks. For example, the stock's 10-day call/put volume ratio across these exchanges stands at an even 4.00, meaning call buying has quadrupled put buying. 

What's also notable about ATVI is its relatively low Schaeffer's Volatility Index (SVI). This reading comes in at 22%, putting it a mere 1 percentage point from a 12-month low. In other words, the options market is pricing in extremely low short-term volatility expectations at the moment, which is good news for near-term call buyers. 

Elsewhere, analysts share option traders' upbeat view of ATVI stock. By the numbers, 15 brokerage firms cover the stock, eleven of which consider it a "buy" or a "strong buy." What's more, there's not a single "sell" rating on the books.

Activision Blizzard, Inc. (NASDAQ:ATVI) has earned this bullish attention with an impressive multi-month uptrend. Since a disappointing start to the year that saw the shares fall as low as $26.49 in February, ATVI has rocketed over 62% higher. What's more, when downbeat hedge fund news weighed on the stock last month, the $39 area -- roughly in line with ATVI's year-to-date breakeven point -- provided a strong layer of support. 

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