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

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.

Follow @Schaeffers

The $25K Day Trading Barrier is Gone

The long-standing Pattern Day Trader (PDT) rule that required many traders to maintain a $25,000 account balance is no longer standing in the way.

That means more traders can actively pursue short-term opportunities without the barrier that kept so many on the sidelines.

Now it's all about having the right strategy.

Dynamite Day Trading Signals helps you hit the ground running with up 2 options trade alerts per week, built to capture fast-moving opportunities.

👉 Sign up now to receive the next trade