Buzz Stocks: Allergan, Inc., DreamWorks Animation SKG, Inc., and Baker Hughes Incorporated

Today's stocks to watch in the news include AGN, DWA, and BHI

by Andrea Kramer

Published on Nov 17, 2014 at 9:29 AM
Updated on Apr 20, 2015 at 5:32 PM

U.S. stocks are pointed lower this morning, due to a surprise drop in Japan's gross domestic product (GDP). Among the equities in focus are drugmaker Allergan, Inc. (NYSE:AGN), entertainment issue DreamWorks Animation SKG, Inc. (NASDAQ:DWA), and oil-and-gas concern Baker Hughes Incorporated (NYSE:BHI), which are headlining Merger Monday.

  • AGN is headed 5% higher, on reports that the firm is on the cusp of being acquired by Actavis plc (NYSE:ACT) for about $62.5 billion, or $210 per share -- trumping Valeant Pharmaceuticals Intl Inc's (NYSE:VRX) bid of $200 per share. AGN ended last week at $198.65, and has spent most of November dawdling just below the VRX bid price. In light of today's expected uptick, Allergan, Inc. will be sitting in record-high territory, much to the delight of recent option buyers. On the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX), the equity's 10-day call/put volume ratio of 3.62 stands higher than 91% of all other readings from the past year, pointing to a healthier-than-usual appetite for long calls over puts during the past two weeks.

  • DWA is poised to drop 14% out of the gate, amid reports that toymaker Hasbro, Inc. (NASDAQ:HAS) has backed out of talks to buy the studio. Sources say HAS turned tail after failed price negotiations and a negative shareholder reaction to the news -- which hit the Street last Thursday, and translated into a two-day drop of 6% for HAS. The shares of DreamWorks Animation SKG, Inc., meanwhile, soared 16.3% in the same span, settling at $26.02 on Friday. This morning's anticipated drop could catch some DWA options traders off-guard. The equity's Schaeffer's put/call open interest ratio (SOIR) of 0.46 stands just 8 percentage points from a 12-month low, suggesting short-term speculators are more call-biased than usual. Relatively speaking, buyers are paying up for their near-term contracts, too, as the security's Schaeffer's Volatility Index (SVI) of 60% ranks in the 74th percentile of its annual range.

  • Finally, BHI is on pace for an 11% jump, after the firm said it reached a definitive agreement to be bought by Halliburton Company (NYSE:HAL) for close to $35 billion, or $78.62 per share -- a premium of 31.3% to BHI's closing price of $59.89 on Friday. The deal -- which has been approved unanimously by both companies' boards -- confirms chatter from late last week, before which Baker Hughes Incorporated was lingering just north of $50. Short-term options traders are likely cheering the news, as the equity's SOIR of 0.61 sits higher than just 19% of all other readings from the past year.

A Schaeffer's exclusive!

The Expert's Guide

Access your FREE trading earning announcements before it's too late!


 
 

Partnercenter


NEW! Explore Schaeffer’s Partners' deals and get connected to top online brokerages with deals tailored exclusively for our readers.  Get answers to your questions regarding transfer fees, commission rates, programs and available discounts related to online trading services.

MORE | MARKETstories


The Nevada Discovery That Could Jeopardize Chinese Dominance
Click to continue to advertiser's site.
Stocks Surge During Holiday-Shortened Week
Stocks chugged higher as the government responded to the coronavirus crisis with more funding
Bank Stocks Ease Investors Back Into Earnings Season
Bank stocks will kick off earnings season next week
The Top Lithium Play of 2020
Click to continue to advertiser's site.