Excitement over the release of "World of Warcraft Classic" has shares of Activision Blizzard, Inc. ATVI trading higher on Tuesday. Not only does Activision have gamers’ attention, a series of large option trades on Tuesday suggests the stock also has the attention of some traders with deep pockets.
The Trades
On Tuesday, Benzinga Pro subscribers received 8 option alerts related to unusually large Activision trades. Here are the four biggest:
- At 9:37 a.m., a trader sold 3,925 Activision call options with a $52 strike price expiring on Sept. 6 near the bid price at $1.896. The trade represented a $744,180 bearish near-term bet.
- Less than a minute later, a trader bought 4,726 Activision call options with a $52 strike price expiring on Sept. 6 near the ask price of 87.8 cents. The trade represented a $414,942 bullish near-term bet.
- At 10:10 a.m., a trader sold 3,206 Activision call options with a $50 strike price expiring on Friday at the bid price of $1.68. The trade represented an $538,608 bearish near-term bet.
- Again, less than a minute later, a trader bought 3,114 Activision call options with a $52.50 strike price expiring on Sept. 20 above the ask price at $1.449. The trade represented an $451,218 bullish bet.
Of the eight total large Activision option trades, four were either calls purchased at or near the ask or puts sold at or near the bid, trades typically seen as bullish. Three trades were calls sold at the bid, trades typically seen as bearish. One neutral call trade was executed near the spread midpoint.
Why It's Important
Even traders who stick exclusively to stocks often monitor option market activity closely for unusually large trades. Given the relative complexity of the options market, large options traders are typically considered to be more sophisticated than the average stock trader.
Many of these large options traders are wealthy individuals or institutions who may have unique information or theses related to the underlying stock.
Unfortunately, stock traders often use the options market to hedge against their larger stock positions, and there’s no surefire way to determine if an options trade is a standalone position or a hedge. In this case, given at least two of the large pairs of trades were executed within one minute of each other, they could easily have represented institutional hedges.
High Expectations For WoW
Activision Blizzard re-released "WoW Classic" Monday on the 15th anniversary of the original game release. Within hours of its release, the game generated more than one million viewers on Twitch, a new record. On Tuesday, "WoW" was the most-watched game on Twitch, with nearly 600,000 viewers. Those numbers dwarf other popular games like Fortnite (106,000 viewers) and League (113,000 viewers).
It’s difficult to know for sure just now many traders were responsible for the large Activision option trades on Tuesday. However, the first two trades and second two trades mentioned above certainly appear to be pairs given their size and proximity. Assuming the trades are not hedges, the good news for Activision bulls is that the traders appear to be selling stakes in Activision calls with lower strike prices and buying stakes in calls with higher strike prices, reducing the size of the overall position while betting on even more upside for the stock.
The stock traded around $50.80 per share at time of publication.
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