Big Activision Blizzard Stock Swing Sparks Heavy Options Trading

Dow Jones reportedly released ATVI earnings ahead of schedule

by Karee Venema

Published on May 3, 2018 at 3:13 PM

Video game stocks are seeing volatile trading today, with Trade-Alert citing the early release of Activision Blizzard, Inc. (NASDAQ:ATVI) earnings by Dow Jones. Whatever the reason, ATVI stock was up nearly 4% at its intraday peak around 1:20 p.m. ET, but has since swung 4.8% lower to trade at $65.09. Against this backdrop, ATVI stock options volume is accelerated, with traders betting on even bigger losses by tomorrow's close.

At last check, more than 29,000 calls and 26,000 puts have traded -- almost six times what's typically seen, and volume pacing in the 99th annual percentile. Most active is the weekly 5/4 63-strike put, and it looks like new positions are being purchased for a volume-weighted average price of $0.43. If this is the case, breakeven for put buyers at tomorrow's close is $62.57 (strike less average premium paid).

This heavy put buying just echoes the trend seen in ATVI's options pits in the two weeks leading up to its earnings release -- initially slated for release after tonight's close. At the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX), the stock's 10-day put/call volume ratio of 0.88 ranks in the 90th annual percentile, suggesting long puts have been initiated relative to calls at a quicker-than-usual clip.

Looking at the charts, the $64-$65 region has served as a floor for ATVI stock throughout 2018, which sits just above the stock's year-to-date breakeven mark. However, the stock's trend has been to the downside since hitting a record high of $79.63 on March 12, off 18.3% from this notable milestone. Nevertheless, the equity hasn't finished a week below $62.57 since Dec. 8.

 atvi stock chart may 3

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