Traders Position for Big Activision Rally

Activision Blizzard released the potential blockbuster "Starcraft II"on Tuesday, and one large trader is playing for a rally.

OptionMonster's tracking programsyesterday detected the purchase of 8,153 February 14 calls for $0.46 and the sale of a matching number of February 10 puts for $0.47. The trade produced a credit of $0.01 and pushed volume to more than 150 times open interest in both strikes.

Activision's stock rose 1.53 percent to $11.91 yesterday and is up 8 percent in the last month. The shares have faced selling pressure ever since the 2008 financial panic, keeping them trapped between $10 and $13 while most other stocks have staged major rallies.

However, the earnings trend appears to be improving: Activision shares popped after issuing results in November and February and then gave bullish guidance in April and May.

The new "Starcraft" titleis expected to sell more than 4 million copies in the next month. The game is the sequel to a wildly popular title that has sold more than 11 million copies since 1998. Another potential catalyst is the release of second-quarter results after the bell on Aug. 5.

Yesterday's trade will simulate a long position in the name, making unlimited profits if it rallies above $14 by expiration and losing money below $10. The strategy, known as a bullish combination, resembled another trade implemented in March.

Overall options volume in the name was seven times greater than average in the session.


Activision Competes With:

Electronic Arts


Take-Two Interactive Software

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David Russell is a reporter and writer for OptionMonster.