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Option Bulls Get Social With Zynga

Zynga

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has been tough to figure out, but some traders think they get it.

Goldman Sachs recently found the company attractive, predicting that second-quarter earnings and new products will be positive catalysts. Then yesterday, as Zynga pushed off its lows, the June 6 weekly calls traded more than 6,400 contracts from $0.15 up to $0.25. The July 6s and July 7s were also active on OptionMonster’s tracking systems.

Zynga

Callslock in the price investors must pay to buy stock, so they can generate major leverage in the event of a rally. But if the shares don’t move, the options will expire worthless.

Shares of Zynga, which makes games for social networks such as Facebook, climbed 3.78 percent to $5.77 yesterday. It's down by more than 50 percent since March.

Overall calls at all strikes in the name outpaced putsby about 21,000 to 10,000. Total option volume was more than twice the average amount.

—By CNBC Contributor Pete Najarian

Additional News: Why Zynga’s Stock Fell Off a Cliff

Additional Views: Zynga’s Competition, Insider Selling Raise Concerns: Analyst

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Options Trading School:

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Pete Najarianis a professional investor, CNBC contributor, regular co-host of CNBC’s “ Fast Money ” and co-founder of OptionMonster.com . Najarian has no positions in Zynga.

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Disclaimer

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