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OpenTable Options Heat Up as Rival's Buyout Sinks the Shares

September-dated options are hot in the wake of OPEN's plunge

by 9/8/2011 12:45:50 PM
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Short-term options are flying off the shelves on OpenTable, Inc. (OPEN - 57.29) today, as traders react to the stock's Google-induced plunge. Specifically, Google (GOOG) surprised the Street with the purchase of OPEN rival Zagat, though the financial terms of the deal weren't disclosed.

In early afternoon trading, OPEN has seen roughly 6,500 calls and 7,100 puts cross the tape -- already far surpassing its average daily volume of fewer than 2,500 calls and 2,000 puts.

Upon closer inspection, we find that most of the action has centered around the September series of options, where intraday volume has exceeded open interest at several strikes, pointing to new positions. On the put side, the stock's September 55 and 57.50 strikes have each seen more than 1,500 contracts change hands, while the equity's September 57.50, 60, and 62.50 strikes have all seen accelerated call activity.

Technically speaking, the shares of OPEN have surrendered roughly 8.8% at midday, with the stock now within striking distance of its annual low of $54.42. From a longer-term perspective, today's descent simply continues a recent trend for OPEN, which has more than halved itself since tagging an annual high of $118.66 in late April. Ushering the security lower has been its 10-week moving average, which has rejected all but one of the equity's weekly advances over the past four months.

Weekly chart of OPEN since April 2011

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