Bulls Eye More Loeb-Inspired Upside for YUM!, Devon Energy

Call volume is accelerated on Yum! Brands, Inc. (NYSE:YUM) and Devon Energy Corp (NYSE:DVN)

May 1, 2015 at 11:29 AM
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Call players are circling Yum! Brands, Inc. (NYSE:YUM) and Devon Energy Corp (NYSE:DVN), amid reports Daniel Loeb's Third Point LLC has taken stakes in the companies. Specifically, YUM calls are trading at three times the average intraday pace, while DVN calls are crossing the tape at six times what's typically seen at this point in the day.

Drilling down, eleventh-hour YUM traders are buying to open weekly 5/1 87.50- and 88-strike calls, expecting the stock to extend its lead north of the strikes through tonight's close, when the series expires. Meanwhile, longer-term speculators are purchasing new positions at YUM's July 95 call, betting on the security to surge into never-before-seen territory by July options expiration.

In DVN's options pits, the weekly 5/8 70-strike call has garnered the most attention, and all signs suggest buy-to-open activity. In other words, option bulls are rolling the dice on a rally through the $70 level by next Friday's close -- when the weekly series expires -- a time frame which includes the company's Tuesday evening turn in the earnings confessional.

From a wider sentiment perspective, today's call-skewed session just echoes the withstanding trend in Yum! Brands, Inc.'s (NYSE:YUM) options pits. This shouldn't be too surprising, considering YUM is up roughly 22% year-to-date to trade at $89.17, and hit a record high of $90.73 earlier today.

Long puts, however, have been popular in Devon Energy Corp's (NYSE:DVN) options pits of late, per the equity's 50-day International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX) put/call volume ratio of 0.66, which ranks in the 98th annual percentile. On the charts, DVN has tacked on 21.5% since hitting its year-to-date low of $56.35 on March 13, and was last seen lingering near $68.44.

 

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