Activision Blizzard, Inc. (ATVI)’s Raid Boss of Lawsuits Showing No Signs of Defeating Options Speculation

Activision Blizzard, Inc. (ATVI)’s Raid Boss of Lawsuits Showing No Signs of Defeating Options Speculation
Source: https://investor.activision.com/news-releases/news-release-details/activision-blizzard-commits-expanded-workplace-initiatives

A Review of Unusual Options Activity & Whales’ Strategies in Activision Blizzard, Inc. (ATVI)

On September 22nd, 2021, in the market capitalization-weighted index NASDAQ Global Select Market Composite (NasdaqGS), a Twitter user posted unusual options activity they had uncovered in Activision Blizzard, Inc., which opened then at $73.19.

Seen above are the unusual options activities seen on September 22nd in Activision Blizzard, Inc.

Most notably are the floor trades, such as, in particular, the 750 contracts on the $70 strike put option sold at the bid, dated for January 19th, 2024, for a spot price of $11.70, totaling approximately $878,000, or 75,000 shares.

Floor trades are executed by floor traders, an exchange member who executes transactions from the floor of the exchange exclusively for their own account.  

Additionally, there were the 6,275 and 3,135 contracts traded on the $80 strike call option at the ask, with a spot price of $0.53, with the expirations of October 15th, 2021, representing over 941,000 shares.

At the time, the volume on this position was approximately 14,700, with an open interest of 7,200; as of this writing, the volume was 4,580 with an open interest of 26,300.

The above image shows the unusual options flow orders, represented in sizes as small as 2,000 and as large as 6,725 for the day.

These orders were significant and not filed as floor trades, which is also noteworthy.  However, it is worth noting that the 2,000 and 3,000 sized orders were cross trades from the 23rd and the 27th.

Cross trades are when a broker traded the two or more orders between the requisite number of clients and then reported them on an exchange, so their significance cannot necessarily be determined without additional information.

Regardless, the 3,135 and 6,275 contracts that were traded on the $80 strike call option at the ask, dated for October 15th, 2021, were significant, noteworthy, or unusual, and represented over 941,000 shares, and $499,000 of premium paid to enter into the positions.

These orders had been entered into in spite of the heightened possibilities of legal troubles regarding ATVI’s workplace conditions including reports stating that it continued to work with regulators on addressing and resolving workplace complaints it had received.

The current price on the $80 call contract is an ask of $1.03, or an 194% increase from the whales’ entry price.

Recent Unusual Options Activity

As of Wednesday, September 29th, 2021, Activision Blizzard, Inc. (ATVI) opened at $76.53 and closed at $77.38.  There was additional unusual options activity detected, however this time the sizing of the positions taken and the volumes were reduced.

There were two orders of 990 contracts traded each on the $90 and $80 strike call options dated for November 19th, 2021, both at the ask, at spot prices of $0.82 and $3.26 respectively, representing a total of 198,000 shares.

Recent unusual option activity in Activision Blizzard, Inc.

The orders reported above had come before reports revealing that Activision Blizzard had committed to create an $18 million fund to compensate and make amends to eligible claimants.

Seen above, minimum premiums of $30,000 or more of the topmost 250 positions.

Seen above, the majority of betting of minimum premiums of $30,000 or more of the topmost 250 positions were on the January 21st, 2023 expiration, with $10,573,378 bearish premium traded.  The most active strikes were at the $80 strike price, amounting to $4,478,634 bearish premium.  Of all these orders, 77.4% were represented as traded as bearish premiums, and 73.4% in put premium.

Seen above, betting of premiums of $1,000 or more of the topmost 250 positions.

However, seen above, for betting of premiums of $1,000 or more of the topmost 250 positions, the $77 strike was most active with the October 15th, 2021 expiration as the most active.  Of these orders, 64.2% were of bearish premiums, with 89.9% in calls.

The above chart shows Activision Blizzard, Inc.’s price, in blue, since around August 2nd, 2021; call volume is represented in green, put volume in red, and open interest in yellow.

As seen, call and put volume have begun to trend downward since highs around September 22nd, of the first unusual options activity detection, while Activision Blizzard, Inc.’s price has continued to trend up; however, open interest has not significantly changed since September 22nd, which reveals there is still as much betting or contracts being traded.

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