M&A Optimism Draws CBRE Group, Inc. (CBG) Option Bulls

CBRE Group Inc (CBG) call options are active amid M&A headlines

by Andrea Kramer

Published on Mar 31, 2015 at 2:14 PM
Updated on Jun 24, 2020 at 10:16 AM

Commercial real estate concern CBRE Group Inc (NYSE:CBG) is defying broad-market headwinds, and option traders today are gambling on even higher highs for the stock. At last check, the equity was up 6.3% at $38.69 -- and earlier notched a seven-year peak of $38.99 -- on news of a planned $1.48 billion purchase of a Johnson Controls Inc (NYSE:JCI) unit.

CBG calls are trading at four times the average intraday pace, and have more than quadrupled puts thus far. In light of the news and subsequent rally, the equity's 30-day at-the-money implied volatility has popped 18.4% to 24.7% -- higher than three-quarters of all other readings from the past year.

Specifically, CBG has already seen more than 1,000 calls cross the tape. To put things in perspective, fewer than 6,000 total CBG calls are currently open right now. Most popular is the April 39 call, which traders are buying to open to bet on a move north of $39 by the close on Friday, April 17, when front-month options expire. Amid the security's rally, delta on the call skyrocketed to 0.45, from 0.045 at yesterday's close, indicating a roughly 45% chance of expiring in the money.

Even before today's M&A headlines -- shared with this media firm -- CBRE Group Inc (NYSE:CBG) was on the rise, boasting a year-over-year gain of nearly 33%. In fact, the security was exploring multi-year highs just last week. As such, it's not surprising to find most of Wall Street already in the bulls' corner. Short interest accounts for less than 1% of CBG's total available float, and all four analysts covering the shares consider them worthy of a "strong buy."


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