DuPont (DD) Bulls Make Ambitious Bets After Proxy Fight Win

The proxy fight between E I Du Pont De Nemours And Co (NYSE:DD) and Nelson Peltz comes to an end

by Josh Selway

Published on May 13, 2015 at 11:11 AM
Updated on Jun 24, 2020 at 10:16 AM

E I Du Pont De Nemours And Co (NYSE:DD) is off 5.9% today at $69.93 -- and is the leading laggard on the Dow -- after the company announced it won its proxy fight with activist investor Nelson Peltz. Options traders are rushing in, placing bets on both sides of the aisle, as overall volume is running at six times the expected intraday amount.

One of the more popular contracts is the June 80 call, which appears to be seeing buy-to-open activity. This means traders expect DD to add more than 14.4% -- and topple the round-number $80 mark -- by June options expiration.

During the past 10 sessions at the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX), call buying has dominated. Data shows the stock has accumulated a call/put volume ratio of 4.69 -- meaning almost five calls have been bought to open for each put. Even more telling is the fact that this ratio is higher than 90% of all readings from the past year.

Analysts are much more skeptical of the stock, which has given back 13% since its 17-year high of $80.65 on March 13, and is now on pace to close below its 200-day moving average for just the second time since mid-October. Specifically, 10 of 15 analysts rate E I Du Pont De Nemours And Co (NYSE:DD) a "hold" or worse.


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