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Saturday, September 24, 2022


Dreamworks Draws Heavy Options Volume As Shares Soar

DWA – Dreamworks Animation SKG, Inc. – Shares in Dreamworks are soaring on Wednesday, rallying as much as 18.7% to a fresh 52-week high of $33.02, after the animated feature film maker reported third-quarter profits well above average analyst estimates following the closing bell on Tuesday.

Options traders looking for shares in Dreamworks to continue to hit new highs during the next couple of weeks picked up November expiry calls on the stock this morning, helping drive overall options volume on DWA to more than four times the average daily level as of 11:00 a.m. ET. Traders positioning for shares to continue higher appear to have purchased more than 500 of the now in-the-money Nov $32 strike calls for an average premium of $0.95 apiece during the first 20 minutes of the session. Intraday gains in the price of the underlying now finds the $32 strike calls changing hands at $1.65 each as of the time of this writing.

Bullish strategists also appear to be buying the Nov $34 and $35 strike calls, purchasing around 400 of the $34 calls at a premium of $0.55 each and picking up more than 250 of the $35 calls for a premium of $0.30 apiece. Traders long the $34 and $35 strike calls stand ready to profit at expiration in the event that Dreamworks shares rally another 4.6% and 6.9% to exceed breakeven prices of $34.55 and $35.30, respectively. Shares in Dreamworks Animation are up roughly 95% since the start of the year. 

EA – Electronic Arts Inc. – Better than expected second-quarter earnings reported by videogame maker Electronic Arts and an upgrade of the stock to ‘Strong Buy’ from ‘Hold’ with a target share price of $33.00 at Needham & Co. helped shares in EA rally more than 12% on Wednesday morning to $27.24, the highest level since mid-September. Shares in Electronic Arts are up nearly 130% since this time last year.

Buyers of weekly call options on EA ahead of the earnings report are enjoying sizable overnight gains in the value of their positions. Time and sales data from Tuesday’s session suggests traders purchased the Nov 01 ’13 $24 strike weekly calls yesterday. Roughly 1,000 of the $24 calls were purchased on Tuesday morning at a premium of $1.02 each. Currently, these contracts are changing hands at $2.31 apiece as of 11:50 a.m. ET. The Nov 01 ’13 $25 and $25.5 strike calls also attracted buyers on Tuesday prior to the release of EA’s earnings after the close. 

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