Yahoo! Inc. (YHOO) Momentum Fails to Impress Option Traders

Yahoo! Inc. tagged a new 14-year high earlier today

Nov 13, 2014 at 11:19 AM
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Another day, another fresh 14-year peak for Yahoo! Inc. (NASDAQ:YHOO), which rallied to the $51.17 mark right out of the gate -- its loftiest perch since September 2000. The move north has sparked a rush of activity in YHOO's options pits, but not everybody is convinced of the equity's ability to sustain this upward momentum.

Taking a quick step back, overall option volume is trading at 1.4 times what's typically seen at this point in the day. While YHOO's weekly 11/14 50- and 51-strike calls are most active -- and seeing a mix of buying and selling activity -- the December 46 put has also received notable attention, with 4,532 contracts on the tape at last check.

The majority of the activity at this out-of-the-money strike has occurred on the ask side, implied volatility is up, and volume outstrips open interest, making it safe to assume new positions are being purchased. The options market isn't too convinced this put will be in the money at the close on Friday, Dec. 19 -- when back-month options expire -- as its delta is currently docked at a slim negative 0.19.

As noted, today's technical milestone just echoes YHOO's withstanding trajectory, with the shares boasting 24% year-to-date gain to trade at $50.13. Given the stock's strength on the charts, it's possible that a portion of today's put buying could be at the hands of shareholders protecting paper profits. Meanwhile, following calls for a changing of the guard at Yahoo! Inc. (NASDAQ:YHOO), the company's international arms announced new partnerships with India's online marketplace Flipkart and Integral Ad Science.


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