PVTL Stock Soars on Buyout Deal

PVTL has seen a huge amount of bearish activity in the options pits of late

Deputy Editor
Aug 23, 2019 at 9:33 AM
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Dell-controlled Pivotal Software Inc (NYSE:PVTL) just inked a deal with VMware (VMW), and the stock is skyrocketing as a result. VMW on Thursday said it bought Pivotal in a $2.7 billion deal. PVTL stock on course for its highest close since June, up 8.6% at $14.88.

The security is still far from closing its early June bear gap, which culminated in an all-time low of $8.03 on Aug. 14. A massive 68.7% surge last week on M&A reports, however, had PVTL recovering fast. Today, the equity is threatening to top its 100-day moving average -- a trendline it hasn't finished north of in nearly three months. 

Despite this recent bottom, analysts are holding out hope for PVTL, with five calling it a "buy" or better, compared to only three who say "hold" or worse. Plus, the consensus 12-month target price of $16.44 is at a solid 20% premium to current levels. 

Options players, on the other hand, aren't so sure. On the International Securities Exchange (ISE), Cboe Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX) PVTL sports a 10-day put/call options ratio of 1.88, which stands higher than all but one other reading from the past year. 

Echoing this, the security's Scaheffer's open interest ratio (SOIR) of 1.6 is also in the 99th percentile of its annual range, suggesting short-term option players have rarely been more put-heavy during the past 12 months. In fact, the December 14 strike has seen the biggest increase in open interest during the past 10 days for all puts, with roughly 22,600 contracts added.

 

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