This bull signal hasn't been wrong in the past three years
The shares of Activision Blizzard Inc (NASDAQ:ATVI) are up 1.1% at $92.45 at last check. Longer term, the shares are still struggling to overcome a ceiling at the $100 level, despite the equity making a home above that region in February, culminating in a Feb. 16 all-time high of $104.53, before pulling back. ATVI is on track to snap a four-day losing streak, and could finally break above its 2021 breakeven mark, should today's positive price action hold. What's more, the equity recently pulled back to a historically bullish trendline that could help push the shares back toward record high territory.
Specifically, Activision Blizzard stock just came within one standard deviation of its 160-day moving average, after spending considerable time above the trendline. Four similar signals have occurred during the past three years, per data from Schaeffer's Senior Quantitative Analyst Rocky White. ATVI enjoyed positive returns one month after each signal, averaging an 8.8% gain. A similar move from its current perch would put the equity above the $100 region once again.
The brokerage bunch is already majorly optimistic toward the gaming name. Currently, 15 analysts carry a "strong buy" rating, with another two recommending "buy." Meanwhile, just two say "hold," and there's not a "sell" to be seen. Plus, the 12-month consensus price target of $116.41 is a healthy 25.9% premium to current levels.
That optimism is being echoed in the options pits, where calls have been favored over the last two weeks. This is per Activision Blizzard stock's 10-day call/put volume ratio of 5.93 at the International Securities Exchange (ISE), Cboe Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX). This ratio stands higher than 84% of annual readings, suggesting a stronger preference for calls.
And speculating on ATVI's next move with options could be the most affordable move. The stock's Schaeffer's Volatility Index (SVI) of 24% stands higher than just 6% of readings in its annual range, implying that options players are pricing in relatively low volatility expectations at the moment -- a boon for premium buyers.