Traders bet stock of video game maker Activision Blizzard will surge on earnings

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Options traders betting Activision Blizzard will be big winner on its earnings report

Activision Blizzard's stock could soon be on a hot streak.

The video game maker behind "Call of Duty" reports first-quarter earnings after Thursday's closing bell, and the options market is implying a 6.5% move in either direction — a meaningful swing for a stock that has gained less than 5% year to date.

And although the stock has had a difficult 12 months, shedding about 29% in market value, options traders are more bullish than bearish heading into earnings, Dan Nathan, principal of RiskReversal.com, said Wednesday on CNBC's "Options Action."

"Call volume today ran a little hot to that of puts. It was about two times that," Nathan said. "And it was interesting that a lot of the call buying, or the most active call strike, was in the weekly $50 calls. There was about 3,000 [to] 3,500 of those traded on an average [price] of about $1.12 or so. And when you see that with a stock at $48, $48.50, that's traders playing for a short-term bounce."

Nathan, who is also a trader on CNBC's "Fast Money," said the improved sentiment could be coming from the recent action in shares of Activision. The stock fell dramatically from its highs in 2018 before spending some time consolidating, which is often a precursor to a move higher.

"It's still down about 35% from those all-time highs," Nathan noted, referencing the above chart. "The thing obviously topped out last year. But look at this consolidation that it's making here. And, so, if you're going to buy short-dated calls into that print, you're making a defined-risk bet that it's going to break out, finally, after this long consolidation."

Shares of Activision climbed more than 2% in early Thursday trading.