Very Elevated Options Trading in Zynga Ahead of Earnings (ZNGA)

All of the action is in the May 2012 Calls and Puts with more than 10,000 traded in each series:

• The $9 Calls saw more than 12,000 contracts trade, more than its entire open interest before today.
• The $11 Calls also saw more than 12,000 contracts trade, and that is also more than its entire open interest before today.
• The $8 Puts in May saw more than 11,300 contracts trade today, which is nearing 3-times Zynga’s entire open interest before today.

As a reminder, trading volume of 10,000 options contracts actually translates to 1 million shares of common stock if you take it at face value on a fully leveraged basis of 1 contract per 100 shares of common stock.

Zynga shares are trading up almost 3% at $9.38 ahead of the report and the post-IPO range is $7.97 to $15.91.  Yahoo! Finance lists its market capitalization rate as $6.77 billion for the company’s equity value.

Thomson Reuters has estimates of $0.05 EPS on $317.25 million in revenue.  Next quarter estimates are $0.06 EPS and $339.55 million in revenue.  Keep in mind that Zynga is trading as a busted IPO as of now.

JON C. OGG