Last-Minute Option Traders Rush Rallying Yahoo! Inc. (YHOO)

Yahoo! Inc. (YHOO) is moving higher as a top executive confirmed the company may sell some patents and other non-core assets

Alex Eppstein
Mar 4, 2016 at 12:32 PM
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Yahoo! Inc. (NASDAQ:YHOO) is having a day in the sun, as the media firm considers the sale of more assets. Specifically, Chief Financial Officer Ken Goldman said the company's strategic alternatives committee is thinking about unloading up to $3 billion in "non-core assets," such as patents. As such, YHOO stock is up 2.3% at $33.62, and option traders may be eyeing more upside through tonight's close.

Currently, 19,000 YHOO calls have been exchanged, slightly besting the expected intraday volume. The stock's most active option is the weekly 3/4 33.50-strike call, and traders may be purchasing fresh positions to wager on extended gains through the closing bell. Based on the option's volume-weighted average price (VWAP) of $0.14, breakeven for the buyers is $33.64 (strike plus VWAP) -- a hair above current levels.

Call buyers have been bombarding YHOO in recent weeks, so today's activity is just more of the same. Specifically, traders have bought to open more than six calls for each put during the last 10 sessions at the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX). The resultant call/put volume ratio of 6.15 sits 1 percentage point from an annual peak.

Echoing this bias toward calls over puts is YHOO's Schaeffer's put/call open interest ratio (SOIR). At 0.48, this ratio has never been lower over the last year, indicating short-term call open interest has never outstripped put open interest by a greater margin, looking back 12 months.

That doesn't necessarily mean Yahoo! Inc.'s (NASDAQ:YHOO) chart justifies the bullish sentiment. While the shares have surged since hitting a two-year low of $26.15 on Feb. 11, they've lost over 27% since topping out at an annual high of $46.17 in April.

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