Broadcom Corporation (BRCM) M&A Hopes Spark Options Frenzy

Broadcom Corporation (BRCM) options are in demand amid buyout hopes

May 27, 2015 at 2:46 PM
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While a handful of semiconductor stocks are comfortably higher this afternoon, Broadcom Corporation (NASDAQ:BRCM) has left its sector peers in the dust. The security just catapulted to a 14-year high of $56.40 -- and was last seen 16.7% higher at $54.78 -- amid reports that Avago Technologies Ltd (NASDAQ:AVGO) is in talks to buy the firm. Against this backdrop, BRCM calls are flying off the shelves at a rapid-fire rate. 

Specifically, BRCM has seen roughly 51,000 calls cross the tape -- more than five times the intraday norm, and about five times the number of puts exchanged. It looks like bulls are buying to open 55-strike calls in both the weekly 5/29, June, and July series, gambling on an extended climb north of $55 in the near term. What's more, the equity's 30-day at-the-money implied volatility has more than doubled to 54.6% -- an annual high. 

Even before today's M&A surge -- which echoes that of Juniper Networks, Inc. (NYSE:JNPR) -- Broadcom Corporation (NASDAQ:BRCM) option traders were betting bullishly. On the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX), the equity's 10-day call/put volume ratio of 8.41 stands higher than 86% of all other readings from the past year.

 

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