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Speculation is swirling over a potential Akamai Technologies, Inc. and Alibaba Group Holding Ltd deal
Call players have set their sights on Akamai Technologies, Inc. (NASDAQ:AKAM) today, with the contracts crossing the tape at a rate almost seven times the intraday average. Amid this accelerated activity, the stock's 30-day at-the-money implied volatility has shot 10.1% higher to 25.3%, signaling elevated demand for AKAM's short-term options. In fact, the equity's five most active options all expire within the next week.
Drilling down, AKAM's weekly 11/14 61.50-strike call has seen the most action, with 2,180 contracts traded at last check. The majority have crossed at the ask price and volume outstrips open interest, making it safe to assume new positions are being purchased.
Thanks to today's 2.4% pop that has the stock lingering near $61.89, these calls have already surpassed the traders' breakeven mark of $61.71, which is the strike plus the volume-weighted average price (VWAP) of $0.21. Profit will accrue on a continued move north of here, while losses are limited to the initial premium pad, should AKAM settle below the strike at tonight's close, when the series expires.
Elsewhere, buy-to-open activity has been detected at AKAM's November 59.50 and 61.50 calls, which expire at next Friday's close. Based on the respective VWAPs of $1.86 and $0.75, breakeven for the front-month call buyers is $61.36 and $62.25.
As noted, Akamai Technologies, Inc. (NASDAQ:AKAM) is trading solidly higher today, as rumors swirl over a potential partnership with Alibaba Group Holding Ltd (NYSE:BABA) -- which is up 0.1% following yesterday's retreat from record highs. However, this is just more of the same for a stock that's tacked on nearly 20% since taking a sharp bounce off its 320-day moving average in mid-October.