Zynga (ZNGA) shares seeing a bit of put selling after bottoming out near $2.70 last week following disappointing earnings. Today ZNGA option flow is light, on track for 12,000 contracts, and dominated by a seller of Jan 2.5 puts, collecting about 39 cents for 1000 contracts. Last week, on 8/2, several thousand traded for an avg price near 44 cents as shares hit $2.71. Shares are up 24 cents to $2.96 in afternoon action and Jan 2.5 puts on the stock are now about 15.5 percent out-of-the-money and expiring in 165 days. By writing the downside puts, today’s premium sellers appear to be making a statement that they are willing buyers at the price level. It might also reflect a view that last-weeks lows will hold and the 2.5 puts will expire worthless in mid-Jan 2013.
About the Author (Author Profile)
Henry Schwartz is the president of Trade Alert LLC, a provider of real-time options analysis tools to leading Wall Street firms. His systems analyze hundreds of thousands of transactions per second to help professionals identify and interpret market activity in real time, supporting informed trading decisions and intelligent idea generation. He has held institutional trading and management roles with Bank of America, Bear Stearns, Salomon Brothers and the Hull Group, and made markets on the CBOE and AMEX floors in the US, and EUREX and MONEP overseas. Prior to founding Trade Alert, he led the electronic market-making group at Bank of America coincident with the launch of the International Securities Exchange. He received his bachelor’s degree in Economics from the University of California, San Diego and his MBA from NYU’s Stern School of Business.