NortonLifeLock Stock Surges on Billion-Dollar Acquisition

The merged companies will serve over 500 million customers

Deputy Editor
Aug 11, 2021 at 10:14 AM
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The shares of  NortonLifeLock Inc (NASDAQ:NLOK) are up 8.7% this morning to trade at $26.24, following news that the cybersecurity company will buy U.K.-based Avast in a cash-and-stock deal worth up to $8.6 billion. The deal will allow the two companies to extend their services to over 500 million customers, combining the strengths of both, according to NortonLifeLock chief executive Vincent Pilette. Prague- and London-listed shares of Avast also surged on Wednesday. 

NLOK is already up 26.3% in 2021, despite a sharp pullback from its June 10, record-high of $28.92. The stock attempted a rally back toward this level in July, but was largely rejected by its 30-day moving average. Though this trendline still looms as potential resistance, the equity looks to have found a floor at the 140-day moving average, which also provided support prior to NLOK's mid-May bull gap towards its record peak. 

An unwinding of pessimism among short-term options traders could send NLOK higher. The security sports a Schaeffer's put/call volume ratio (SOIR) of 1.18, which stands higher than 96% of readings from the past year. This means these traders have rarely been more put-biased. 

Today's activity is extremely call-heavy, however. So far, 6,456 calls have crossed the tape, which is 17 times the intraday average, and more than seven times the number of  puts exchanged. Most popular is the August 26 call, followed by the 24 call in the same monthly series. 

Speaking of options, NLOK's can be had at a relative bargain at the moment. The equity's Schaeffer's Volatility Index (SVI) of 35% sits in the extremely low 5th annual percentile. This implies options traders are pricing in relatively low volatility expectations for NortonLifeLock stock at present. 

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