Option Bulls Busy as Buyout Buzz Surrounds ARM Holdings

ARM Holdings plc (ADR) (NASDAQ:ARMH) is sharply higher around midday, as speculation mounts regarding a possible Apple Inc. (NASDAQ:AAPL) takeover bid. At last check, shares of the microprocessor maker have surged 3.4% to trade at $50.63, and call volume has exploded.

Diving into the details, ARMH calls are crossing at 37 times the expected intraday rate. By the numbers, nearly 7,400 calls are on the tape, versus just over 100 puts. Seeing buy-to-open activity are the out-of-the-money April and May 55 calls -- the stock's two most active strikes. By initiating these positions, speculators anticipate ARMH will topple $55 -- and move into annual-high territory -- by the respective expiration dates.

Today's accelerated call buying is just par for the course. During the last 10 weeks at the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX), ARMH has racked up a call/put volume ratio of 4.82 -- which ranks in the 86th percentile of its annual range.

Also optimistic are analysts. In fact, 90% of brokerage firms tracking ARMH have handed out a "buy" or better recommendation, with not a single "sell" to be found.

Technically, however, ARM Holdings plc (NASDAQ:ARMH) has been a bit of a mixed bag. While the shares have advanced 9.4% year-to-date, they've pulled back 7.3% since hitting an annual high of $54.64 in early March.