Buyout Rumors Entice The Western Union Company (WU) Bulls

The Western Union Company (NYSE:WU) is seeing a rare lift in bullish options betting

May 6, 2015 at 2:59 PM
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The Western Union Company (NYSE:WU) puts have been popular in recent weeks, per data from the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX). Specifically, the stock's 10-day put/call volume ratio checks in at 16.30 -- in the 91st annual percentile.

On a similar note, WU boasts a Schaeffer's put/call open interest ratio (SOIR) of 3.87, with put open interest nearly quadrupling call open interest, when looking at options expiring in the next three months. More significantly, this reading sits at a 52-week high, indicating short-term traders have never been so put-focused.

Today, however, the tables have turned, with WU up 4.3% at $21.87 -- and fresh off a six-year high of $22.84 -- amid earlier buyout rumors (which the company has since refuted). In fact, the stock's calls are crossing at 14 times the average afternoon clip.

Diving deeper, WU is seeing buy-to-open activity at its May 22 call. These buyers think the equity will muscle north of $22 by the close next Friday, when front-month options expire.

Meanwhile, The Western Union Company's (NYSE:WU) most active strike is the longer-dated August 20 put, where speculators may be selling to open positions. If this is the case, the put writers are confident the round-number $20 level will act as support from now through August options expiration.
 

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