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Yahoo! Inc. (NASDAQ:YHOO) has seen about 24,000 calls change hands so far this session, and more than one-third of them can be traced to a single block of January 2014 20-strike calls. At 11 a.m., one investor traded 9,100 YHOO LEAPS near the ask price of $4.88, meaning that he bought them. Moreover, information from the International Securities Exchange (ISE) indicates the initiation of new long call positions.
With the shares of Yahoo! currently trading at $24.02, the LEAPS are safely in the money. That doesn't mean that they're profitable, however. For the January-dated options to land in the black, YHOO needs to climb to $24.88 (strike price plus premium paid) by expiration; if it doesn't, the most this morning's bullish speculator has on the line is the initial net debit.
Yahoo! has had a rough go of it in the options pits lately, with a few notable exceptions. The equity's ISE/Chicago Board Options Exchange (CBOE)/NASDAQ OMX PHLX (PHLX) 50-day put/call volume ratio finds a home in the 70th percentile of its annual range, suggesting a healthier-than-usual appetite for puts over calls.
On top of that, sentiment among analysts covering the acquisition-oriented Internet name is stacked against it. Eleven brokerages give YHOO a "buy" rating or better, compared to 15 "holds" or worse.
The pessimism is brow-raising, given the stock's technical fortitude. In spite of a three-day pullback, Yahoo! Inc. (NASDAQ:YHOO) is up more than 21% year-to-date and 54% year-over-year, both of which handily outpace the broader S&P 500 Index's (SPX) performance in the same time spans. Additionally, the shares are approaching potential round-number support at $24, as well as their 100-day moving average located in the same neighborhood. Should the underlying find a foothold atop that mark, an unwinding of bearish bets could fuel a contrarian rally.
Fundamentally, the company's annual shareholders' meeting is scheduled to kick-off tomorrow morning.