Verizon Stock Rises on Access-Increasing Acquisition

Calls have been popular in the options pits

Deputy Editor
Sep 14, 2020 at 10:11 AM
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The shares of Verizon Communications Inc (NYSE:VZ) are up 1.1% at $60.44, after news that the company will buy wireless services provider TracFone Wireless Inc in a $6.25 billion cash and stock deal. The deal will include $3.125 billion in cash and $3.125 billion in Verizon stock, with an addition $650 million in future cash consideration depending on performance. The acquisition of its long-time partner will expand Verizon's portfolio into the value segment -- increasing access of its services to a new customer base. 

Today's pop has Verizon stock a chip-shot from its Dec. 20 record high of $62.22. Although the share's ascending 20-day moving average has stepped up as support in recent weeks, VZ remains stymied by its year-to-date breakeven level. 

Options traders have focused on calls lately. The security sports a 50-day call/put volume ratio of 4.75 at the International Securities Exchange (ISE), Cboe Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX), which sits in the 98th percentile of its annual range. This suggests a healthier-than-usual appetite for bullish bets of late. 

Lastly, options look like a good way to go when weighing in on Verizon stock's near-term trajectory. VZ's Schaeffer's Volatility Index (SVI) of 19% sits higher than just 8% of readings in its annual range, suggesting short-term options are pricing in relatively low volatility expectations. In other words, the stock's near-term options are attractively priced at the moment.

 

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