M&A Speculation Brings In eBay Inc. (EBAY) Bulls

Could Alibaba Group Holding Ltd (BABA) be interested in eBay Inc (EBAY)?

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Published on Feb 10, 2015 at 12:44 PM
Updated on Apr 20, 2015 at 5:32 PM

eBay Inc (NASDAQ:EBAY) is up 1.7% at $55.26, as some have speculated that Alibaba Group Holding Ltd (NYSE:BABA) could be interested in the online auctioneer. In response to these unconfirmed claims, EBAY speculators have once again taken a bullish approach. In the stock's options pits, calls are trading at four times normal intraday levels, and have outpaced puts by a nearly 5-to-1 margin.

One of the more active options is the February 56 call, which it seems some traders are buying to open. These speculators are hoping for EBAY to extend today's gains above $56 by the close on Friday, Feb. 20, when front-month options expire. Other speculators are looking for more short-term upside, as buy-to-open activity has also been spotted at the weekly 2/13 54.50-strike call, which is now in the money.

Longer term, activity in EBAY's options has centered around puts. In fact, the equity's 10-day International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX) put/call volume ratio of 2.09 is at an annual bearish extreme. This suggests that options traders have been buying to open puts over calls at a much faster-than-usual pace in recent weeks.

On the Street, analysts are split on the stock. Half of the brokerage firms covering the shares say they're a "buy" or better, and the other half deem them worthy of a "hold" or worse.

From a technical outlook, eBay Inc (NASDAQ:EBAY) hasn't done much lately. In the past month, the security has underperformed the S&P 500 Index (SPX), and has lost 1.7% since the start of the year.


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