$ATVI option bulls boost profits

Bullish option traders are boosting big profits in Activision Blizzard (ATVI) today, in positions opened toward the end of last week.

On Dec. 10, Market Rebellion’s tracking systems found that 3,700 December $83 calls expiring this Friday were bought for $1.25 to $1.62 with shares at $82.96. This was clearly a new position, as open interest in the strike was only 677 contracts before the trade occurred.

Market Rebellion co-founder Jon Najarian cited the activity that day on CNBC’s “Halftime Report.”

Those calls traded for as much as $5.25 this afternoon, at least 3 times their purchase priced. The stock rose 6.32% in the same time frame, illustrating the kind of leverage that can be achieved with options.

Long calls lock in the price where a stock can be purchased, gaining with a rally and providing leverage to the underlying shares. The contracts can quickly lose value if the stock stalls or pulls back but also carry less risk than owning the shares themselves.

ATVI ended the day at $88.22, up 1.5%, setting new highs this session. The game developer’s price target was raised to $101 from $95 this morning at JPMorgan.