Groupon Inc (GRPN) Options Pop On Buyout Buzz

GRPN options are heating up amid speculation of a BABA bid

Feb 19, 2016 at 1:55 PM
facebook twitter linkedin


The shares of mega coupon concern Groupon Inc (NASDAQ:GRPN) are skyrocketing this afternoon, once again thanks to Alibaba Group Holding Ltd (NYSE:BABA). Just days after BABA reported a stake in GRPN, reports are circulating that BABA could be on the cusp of takeover talks with GRPN. As such, GRPN options are flying off the shelves at a rapid-fire rate, especially on the bullish side of the aisle.

GRPN calls are crossing the tape at six times the average intraday clip, and have outpaced puts by nearly 10-to-1 so far. Along with some apparent eleventh-hour betting at the February 4.50 call, which expires at today's close, some bulls may be snapping up the March 5 call.

By buying the calls to open, the speculators expect GRPN to surmount $5 by the close on Friday, March 18, when the options expire. Delta on the call more than doubled, to 0.30 from 0.16 yesterday, implying a roughly 30% chance of the option finishing in the money. GRPN hasn't traded north of $5 since July.

At last check, the equity is up 10.9% at $4.26, and peaked at $4.45 earlier today. Groupon Inc (NASDAQ:GRPN) is on pace to end the month atop its 10-month moving average for the first time in a year, up nearly 57% so far in February. As such, short sellers could be sweating. Short interest represents nearly two weeks' worth of pent-up buying demand, at GRPN's average pace of trading.

Sign up now for Schaeffer's Market Recap to get all the day's big stock movers, must-know technical  levels, and top economic stories straight to your inbox.

 

Now is the time to join our thriving community of Event Traders who consistently profit from every earnings season. With this discounted subscription opportunity, you'll stay ahead of the curve and seize opportunities others miss. Do not let Q3 earnings season pass you by – subscribe now and supercharge your portfolio with expert insights that turn market reactions into profit-generating opportunities!! Don't waste another second... join us right now before the next trade targeting +200% is released!