2 Stocks Down on M&A Buzz

Ally Financial bought CardWorks for $2.65 billion

by Patrick Martin

Published on Feb 19, 2020 at 10:11 AM

LendingClub Corporation (NYSE:LC) is trading down 8.1% at $12.10, following the company's quarterly earnings release and news it's buying Radius Bank in a cash-and-stock deal valued at $185 million. LC shares have been trending lower over the past year, and the 200-day moving average has acted as stiff resistance over that time. Options traders seem to be in good position for the extended pullback, since the Schaeffer's put/call open interest ratio (SOIR) of 1.16 comes in at the 75th annual percentile, showing an unusual put-skew for near-term speculators.

Meanwhile, the shares of Ally Financial Inc (NYSE:ALLY) are near the bottom of the New York Stock Exchange (NYSE) this morning, down 10.6% to trade at $28.64. The consumer lending name is lower after announcing a deal to buy CardWorks for $2.65 billion, in an effort to broaden its product offerings. The shares are trading at eight-month lows, although their 320-day moving average has caught today's pullback. Year-over-year, ALLY is still up 8%.

In the options pits, calls have been dominant. At the International Securities Exchange (ISE), Cboe Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX), speculators have bought to open 4.57 calls in the past two weeks, compared to just 379 puts. The resultant call/put volume ratio of 12.07 ranks in the elevated 81st annual percentile, meaning this rate of call buying relative to put buying is unusual.

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