Option Bulls Blitz Orbitz Worldwide, Inc. (OWW) Amid Buyout Buzz

Orbitz Worldwide, Inc. (OWW) call volume soared to eight times the average daily pace on Tuesday

Jan 21, 2015 at 10:20 AM
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Despite being halted for a short time on Tuesday, Orbitz Worldwide, Inc. (NYSE:OWW) tacked on 8.6% by the close -- hitting a new annual high of $10.52 along the way -- amid reports the online travel firm is considering putting itself up for sale. Against this backdrop, call players flooded the equity's options pits. Not only did the contracts cross the tape at eight times the average daily rate, but they also outpaced puts by a more than 18-to-1 margin.

Most active was OWW's March 9 call, and it appears a number of contracts were bought to open here. While the calls are currently in the money, the at-expiration breakeven mark for the call buyers is $10.26 (strike plus the volume-weighted average price of $1.26). Profit will accumulate north of here, while losses are limited to the initial premium paid, should OWW settle south of $9 at the close on Friday, March 20, when the series expires.

From a wider sentiment perspective, yesterday's call-skewed session was just more of the same in OWW's options pits. At the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX), the equity's 50-day call/put volume ratio of 57.42 ranks in the 96th percentile of its annual range. Simply stated, calls have been bought to open over puts with more rapidity just 4% of the time within the past year.

Echoing this is OWW's Schaeffer's put/call open interest ratio (SOIR) of 0.17, which ranks lower than 77% of similar readings taken in the past year. In other words, short-term speculators are more call-heavy than usual toward OWW.

Today, Orbitz Worldwide, Inc. (NYSE:OWW) is paring a portion of Tuesday's gains, and was last seen 0.9% lower at $9.86. It appears the equity is running into resistance at the round-number $10 mark -- an area that rejected OWW's advances last March.

Daily Chart of OWW Since January 2014
 

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