M is eyeing its biggest single-day percentage gain since January 2022
Macy's Inc (NYSE:M) is getting an early Christmas present. Arkhouse Management and Brigade Capital reportedly made a $5.8 billion offer to take the retailer private, in a deal that values the shares they don't already own at $21, or a 20.8% premium to the security's most close.
M is surging in response, last seen up 16.3% at $20.22. The equity is eyeing its biggest single-day percentage gain since January 2022, and trading above the $20 region for the first time since March. The shares are also now trading firmly above their 320-day moving average, and sport a 49.8% quarter-to-date lead.
Macy's stock could be in for a short squeeze. Short interest rose 22.6% over the last reporting period, and the 38.76 million shares sold short make up 14.4% of the equity's available float. A round of bull notes could also generate tailwinds, since the 12-month consensus target price of $15.42 is now a massive 23.1% deficit to M's current price.
The options pits are exploding with activity today, with 29,000 calls and 10,000 puts traded so far, which is four times the intraday average volume. Most popular is the December 20 call, followed by the 19.50 call in that same series, with positions being opened at both.
Premium can be had for a bargain right now, per Macy's stock's Schaeffer's Volatility Index (SVI) of 50% that stands in the relatively low 17th percentile of readings from the past year. This suggests options traders are now pricing in lower-than-usual volatility expectations.