Merger Buzz Ignites Advent Software, Inc.'s (ADVS) Options Pits

Advent Software, Inc. (ADVS) hit an all-time high today

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Published on Jan 28, 2015 at 2:31 PM
Updated on Apr 20, 2015 at 5:09 PM

Advent Software, Inc. (NASDAQ:ADVS) is 7.4% higher today at $40.70 -- and earlier touched an all-time high of $42.85 -- on reports that SS and C Technologies Holdings Inc (NASDAQ:SSNC) is planning to buy the company for roughly $2.3 billion, or $45 per share. In response, calls are trading at seven times the average intraday pace -- and demand for short-term contracts has skyrocketed, as evidenced by ADVS' 30-day at-the-money implied volatility, which hit an annual high today.

One contract seeing plenty of attention is the February 40 call. With possible buy-to-open activity at this strike, according to data from the International Securities Exchange (ISE), some traders are hoping for ADVS to extend its gains above $40 before the contracts expire at the close on Friday, Feb. 20 -- a time frame that includes fourth-quarter earnings.

It's not a surprise to see today's options traders grabbing calls, as this just echoes the withstanding trend. According to the stock's Schaeffer's put/call open interest ratio (SOIR) of 0.11 -- which rests at an annual low -- near-term speculators are more call-skewed now than at any point in the past year. This sentiment is echoed at the ISE, Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX), where almost 117 calls have been bought to open for each put in the past 10 weeks.

Technically speaking, Advent Software, Inc. (NASDAQ:ADVS) has done well. In the past month, shares have outperformed the S&P 500 Index (SPX) by over 25 percentage points.


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