Electronic Arts Inc. (NASDAQ:EA) stock is trading up 4.6% at $101.69, on news the company's battle royale game "Apex Legends" hit 25 million registered users following its release late last week. A price-target hike to $120 from $91 at Bernstein is only fueling the bullish flames, and EA options traders are rushing to get in on the action.
Already today, 46,000 calls and 12,000 puts have changed hands -- eight times what's typically seen at this point, and volume pacing in the 99th annual percentile. The June 130 calls are most active, and Trade-Alert indicates the options are likely being bought to open for a volume-weighted average price of $2.91. If this is the case, breakeven for the call buyers at June options expiration is $132.91 (strike plus premium paid) -- more than 31% above EA's current price.
This bullish positioning isn't new for EA options traders. At the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX), the stock's 10-day call/put volume ratio of 2.97 ranks in the 62nd annual percentile, meaning calls have been bought to open over puts at an accelerated clip of late.
Echoing this, Electronic Arts' Schaeffer's put/call open interest ratio (SOIR) of 0.33 registers in the 20th percentile of its annual range. In other words, short-term speculators are more call-heavy than usual toward EA.
While some of this activity is likely at the hands of traditional options bulls, it's also possible shorts have been initiating an options hedge against any additional upside risk. Short interest jumped 19.1% in the two most recent reporting periods to 8.77 million shares, though this still accounts for just 2.9% of the equity's float.
Looking at the charts, EA stock has been hot since skimming the round $80 mark last Wednesday, up almost 30%. The shares are now on track to close above the century mark for the first time since late October, and their 120-day moving average for the first time since mid-August.
