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Shutterfly, Inc. (SFLY) Call Volume Pops Amid Buyout Buzz

Shutterfly, Inc. call volume is trading at 20 times the average intraday pace

by 8/20/2014 11:18 AM
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Rumors began circulating in early July that Shutterfly, Inc. (NASDAQ:SFLY) was putting itself up for sale, and today, reports are surfacing that a number of private equity firms are coming forth as potential suitors for the photo printing concern. Against this backdrop, shares of SFLY are up 2.4% this morning, and call volume has soared to more than 20 times the average intraday rate.

Most active is SFLY's September 55 call, where 1,502 contracts have changed hands at a volume-weighted average price (VWAP) of $0.97. The majority of these have crossed at the ask price, and volume outstrips open interest, pointing to the purchase of new positions. Based on the average entry price, today's call buyers will profit if SFLY is sitting north of breakeven at $55.97 (strike plus VWAP) at the close on Friday, Sept. 19, when front-month options expire.

From a wider sentiment perspective, today's accelerated call activity only highlights the withstanding trend seen in SFLY's options pits. Specifically, the stock's 50-day International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX) call/put volume ratio of 6.64 ranks in the 69th percentile of its annual range. Simply stated, calls have been bought to open over puts at a faster-than-usual clip in recent months.

With more than 14% of Shutterfly, Inc.'s (NASDAQ:SFLY) float sold short, though, a portion of this activity could be a result of shorts protecting their bearish bets against an unexpected surge. At last check, SFLY was trading at $51.03, and had edged slightly into the green on a year-to-date basis.


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