Option Traders Busy as Confusion Swirls Around Avon Products, Inc. (AVP)

Avon Products, Inc. (AVP) denied received a buyout offer from PTG Capital

by Alex Eppstein

Published on May 14, 2015 at 2:05 PM
Updated on Jun 24, 2020 at 10:16 AM

Avon Products, Inc. (NYSE:AVP) has had a wild day -- touching a more than 20-year low at one point, and charging nearly 20% higher at another -- amid buyout buzz. At last check, the stock was up 5% at $7, and intraday call volume is running at 11 times the norm. By the numbers, 48,000 calls are on the tape, versus 26,000 puts.

Digging deeper, traders are buying to open AVP's May 7 call, expecting to the shares to continue muscling north through tomorrow's close, when front-month options expire. The one option garnering even more attention is the January 2016 7-strike put, where fresh positions are also being purchased. However, these speculators think AVP will move south by January 2016 expiration.

From a longer-term perspective, calls have been the options of choice. AVP has amassed a 10-day call/put volume ratio of 2.17 on the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX), with long calls more than doubling puts. What's more, this ratio outranks nearly three-quarters of comparable metrics from the past year.

As previously mentioned, Avon Products, Inc. (NYSE:AVP) has been all over the place today -- and trading was temporarily halted three times. The shares spent some time in the red before spiking on a supposed buyout bid from PTG Capital Partners Ltd. However, AVP quickly denied any receiving any communication from PTG Capital -- and added it has "not been able to confirm that such an entity exists" -- causing the stock to trim a significant portion of its gains.

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