Options Bulls Blast Broadcasting Stock After TV Deal

SSP is on track to topple its 320-day moving average today

Deputy Editor
Sep 24, 2020 at 10:25 AM
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The shares of E.W. Scripps Co (NASDAQ:SSP) are surging, up 14.4% at $11.94 at last check, after earlier opening the session at nearly $15 a share -- their highest level since January 2020. This rise comes after the broadcasting company announced its intention to buy privately-held TV network operator ION Media for $2.65 billion. Warren Buffett's Berkshire Hathaway (BRK) is backing the deal, making a $600 million preferred equity investment in Scripps in order to aid in financing the purchase.

On the charts, E.W. Scripps stock has recovered fairly well since bottoming out to a decade-low of $5.36 on April 3. Today's gap higher --set to be its best single-session gain since June 5 -- has SSP on track to topple its 320-day moving average for the first time on a closing basis since Jan. 16. Nevertheless, the shares remain down 22% year-to-date.

Meanwhile, analysts are already bullish on SSP, as three of the four in coverage rate the equity a "strong buy," The consensus 12-month price target of $14.67, meanwhile, is an 8.3% premium to current levels. 

Options traders are coming out of the woodwork today. In just the first hour of trading, over 1,500 contracts have changed hands, 66 times the average intraday amount and volume already at an annual high. Leading the charge is the October 15 call, where new positions are being opened. Buyers of this call are banking on more gains from the newspaper stock in the coming month. 

The good news for options traders is that the stock’s Schaeffer’s Volatility Index (SVI) of 72% sits higher than just 18% of all other annual readings. This means options traders are pricing in relatively low volatility expectations at the moment -- a boon for premium buyers.

 

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