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Weekly Three Extreme Trades / Extreme Trade: Activision Blizzard (ATVI) a Buy

Extreme Trade: Activision Blizzard (ATVI) a Buy

April 10, 2018

Activision Blizzard Inc. (NASDAQ:ATVI)develops and distributes content and services on video game consoles, personal computers (PC), and mobile devices. The company operates through three segments: Activision Publishing, Inc.; Blizzard Entertainment, Inc.; and King Digital Entertainment. The company develops, publishes, and sells interactive software products and entertainment content for the console and PC platforms through retail and digital channels, including subscription, full-game, and in-game sales, as well as by licensing software to third-party or related-party companies; and offers downloadable content. It also maintains a proprietary online gaming service, that facilitates the creation of user generated content, digital distribution, and online social connectivity in its games; and develops and publishes interactive entertainment content and services primarily on mobile platforms, such as Android and iOS, as well as distributes its content and services on the PC platform primarily through Facebook. In addition, the company engages in creating original film and television content; and provides warehousing, logistics, and sales distribution services to third-party publishers of interactive entertainment software, as well as manufacturers of interactive entertainment hardware products. Its products include various genres, including first-person shooter, action/adventure, role-playing, strategy, and others. The company serves retailers and distributors, including mass-market retailers, first party digital storefronts, consumer electronics stores, discount warehouses, and game specialty stores through third-party distribution and licensing arrangements in the United States, Australia, Brazil, Canada, China, France, Germany, Ireland, Italy, Japan, Malta, Mexico, the Netherlands, Romania, Singapore, South Korea, Spain, Sweden, Taiwan, and the United Kingdom.

Q4 2017 “was a record quarter to cap off a record year for Activision Blizzard,” said Bobby Kotick, Chief Executive Officer of Activision Blizzard. “In 2017, our community reached new milestones for engagement, our business delivered record revenues and cash flows, and we made important progress in building future growth opportunities such as the Overwatch League.”

While the stock recently pulled back, it’s become aggressively oversold on news that Epic Games’ Fortnite and Bluehole’s Player Unkown Battlegrounds took away player and monetization from Activision’s Overwatch and Call of Duty games.  We believe that a great deal of negativity from this news is fully priced into the stock and has created an incredible buy opportunity for smart investors.

Sitting at its lower Bollinger Band with oversold reads on MACD, RSI and Williams’ %R, we believe the ATVI could recover to $70.50, near-term.

There are two ways to trade ATVI here.  One is to buy the ATVI stock at market prices.  The other is to buy to open the ATVI May 18, 2018 65 calls at market prices.