Yelp Inc. (YELP) Option Traders Applaud Acquisition

Yelp Inc (YELP) call options are active after M&A news, upwardly revised guidance

by Andrea Kramer

Published on Feb 10, 2015 at 11:49 AM
Updated on Apr 20, 2015 at 5:32 PM

Option bulls are blitzing Yelp Inc (NYSE:YELP). After touching an annual low of $42.10 yesterday, the shares were last seen 6.9% higher at $45.06, thanks to M&A news and some upbeat guidance. At midday, YELP calls are running at three times the average intraday pace, and are outnumbering YELP puts by a margin of nearly 4-to-1.

Most active is the now at-the-money February 45 call. Those buying the contracts to open expect YELP to extend its journey north of $45 through the close on Friday, Feb. 20, when front-month options expire. Delta on the call has nearly doubled today, due to YELP's surprise pop, and now sits at 0.50, compared to 0.26 at last night's close. In other words, the contract has about a 1-in-2 shot of expiring in the money.

Even with YELP flirting with new lows recently, today's appetite for bullish bets is more of the same. On the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX), the equity's 10-day call/put volume ratio of 2.03 stands higher than 71% of all other readings from the past year. As such, the security's Schaeffer's put/call open interest ratio (SOIR) is docked at 0.37 -- just 5 percentage points from an annual low, suggesting near-term traders have rarely been more call-heavy.

As alluded to earlier, Yelp Inc (NYSE:YELP) is muscling higher today, after the firm announced the $134 million acquisition of Eat24, a food-ordering service. As a result, Yelp hiked its current-quarter and full-year revenue forecast.


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