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Sunday, September 23, 2012 12:25:17 PM
$ATVI - Potential 10 bagger!
Link to full email alert:http://hosted-p0.vresp.com/938813/649be41bfc/ARCHIVE
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The video game industry is not a hot sector right now. Gaming publishers such as Activision Blizzard and Electronic Arts (Ticker: EA) still haven't recovered since the '08 market crash. Although Activision has held up much better thanks to its hit franchise Call of Duty.
However, there's an opportunity here with ATVI. Activision typically rallies ahead of a new COD (Call of Duty) release similar to how Apple's stock rallies ahead of their product releases.
They're similar to Apple in another way too. They have a very loyal and strong following. Last year's Modern Warfare 3 video game release was the largest entertainment launch in history. This means all forms of entertainment ..not just games, but movies too. The two previous records were held by Activision as well by their Black Ops and Modern Warfare 2 releases. This COD franchise continues to break records in sales and with not much competition other than from EA it looks like COD will continue on strong.
Here's a three year chart showing the last two releases of Activision's titles Modern Warfare 3 and Black Ops:
Their new title, Black Ops 2, is set to release on November 13th which is in less than two months. On Friday my custom scanner spotted a trader purchasing 10,000+ February 2013 13x calls between .46 and .52 worth around $500,000. This unusual activity on top of the high open interest in the November 13x and January 13x calls is definitely intriguing.
I was originally looking at purchasing the November calls, however after going over the charts some more I think we may see ATVI continue the run after this release instead of selling off like it did with the Modern Warfare 3 release. I also don't think the February calls are needed which was what the 10,000+ contracts were bought on. So, I plan on buying the January 2013 14x calls which closed at .16 on Friday.
The reason I believe we'll see the run continue a little while longer this time is because of the technicals. On the monthly chart ATVI is in a very large wedge starting back in 2006. That wedge is coming to an end and with the Black Ops 2 release coming out in November it could be the catalyst that finally gets Activision out of this slump. The first resistance level is $14.40 from the highs of the MW3 release. But, I believe we can see it run to at least $15 this time which is resistance from December 2007 - January 2008. Depending on if those levels hold or not and how successful Black Ops 2 will be, we could potentially see a run back to the all time highs at $18-$19.
Going into the Black Ops 2 release we will most likely see volatility spike in the options. This trade could be a potential 10 bagger or more over the next few months.
Here's the monthly chart for ATVI which shows this wedge:
Link to full email alert:http://hosted-p0.vresp.com/938813/649be41bfc/ARCHIVE
------------------
The video game industry is not a hot sector right now. Gaming publishers such as Activision Blizzard and Electronic Arts (Ticker: EA) still haven't recovered since the '08 market crash. Although Activision has held up much better thanks to its hit franchise Call of Duty.
However, there's an opportunity here with ATVI. Activision typically rallies ahead of a new COD (Call of Duty) release similar to how Apple's stock rallies ahead of their product releases.
They're similar to Apple in another way too. They have a very loyal and strong following. Last year's Modern Warfare 3 video game release was the largest entertainment launch in history. This means all forms of entertainment ..not just games, but movies too. The two previous records were held by Activision as well by their Black Ops and Modern Warfare 2 releases. This COD franchise continues to break records in sales and with not much competition other than from EA it looks like COD will continue on strong.
Here's a three year chart showing the last two releases of Activision's titles Modern Warfare 3 and Black Ops:
Their new title, Black Ops 2, is set to release on November 13th which is in less than two months. On Friday my custom scanner spotted a trader purchasing 10,000+ February 2013 13x calls between .46 and .52 worth around $500,000. This unusual activity on top of the high open interest in the November 13x and January 13x calls is definitely intriguing.
I was originally looking at purchasing the November calls, however after going over the charts some more I think we may see ATVI continue the run after this release instead of selling off like it did with the Modern Warfare 3 release. I also don't think the February calls are needed which was what the 10,000+ contracts were bought on. So, I plan on buying the January 2013 14x calls which closed at .16 on Friday.
The reason I believe we'll see the run continue a little while longer this time is because of the technicals. On the monthly chart ATVI is in a very large wedge starting back in 2006. That wedge is coming to an end and with the Black Ops 2 release coming out in November it could be the catalyst that finally gets Activision out of this slump. The first resistance level is $14.40 from the highs of the MW3 release. But, I believe we can see it run to at least $15 this time which is resistance from December 2007 - January 2008. Depending on if those levels hold or not and how successful Black Ops 2 will be, we could potentially see a run back to the all time highs at $18-$19.
Going into the Black Ops 2 release we will most likely see volatility spike in the options. This trade could be a potential 10 bagger or more over the next few months.
Here's the monthly chart for ATVI which shows this wedge:
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