Terex Corporation (TEX) Buyout Buzz Fuels Call Volume

China-based Zoomlion has reportedly upped its buyout offer for Terex Corporation (NYSE:TEX)

by Karee Venema

Published on Mar 15, 2016 at 3:22 PM
Updated on Jun 24, 2020 at 10:16 AM

Terex Corporation (NYSE:TEX) is flying today -- up 7.2% at $23.34 -- on reports China-based Zoomlion has upped its buyout bid for the construction company. In fact, shares of TEX were halted earlier amid increased volatility, while options volume has jumped to two times the average intraday rate.

By the numbers, 3,389 calls have changed hands on TEX today, compared to 330 puts -- resulting in a top-heavy call/put volume ratio of 10.27. Short-term options are in demand, with each of TEX's 10 most active options expiring in the monthly March and April series of options.

This preference for calls over puts among short-term speculators is just more of the same in TEX's options arena. Specifically, the stock's Schaeffer's put/call open interest ratio (SOIR) of 0.18 sits lower than 98% of all comparable readings taken in the past year.

In the front-month series, peak call open interest of 10,627 contracts is currently found at the March 24 strike. It looks like the majority of these calls were initiated in early February, when TEX was trading around $21.20, but it's not clear whether they were bought or sold.

Meanwhile, in the back-month series, the April 27 strike is home to peak call open interest of 13,555 contracts. According to Trade-Alert, it seems the majority of these positions were opened yesterday in conjunction with TEX's April 23 calls as part of a larger call ratio spread.

On the charts, TEX is up almost 72% from its Jan. 20 four-year low of $13.62 -- thanks in large part to a bull gap that came on the heels of Zoomlion's initial all-cash offer of $30 per share. However, this rally has been running out of steam near the $23-to-$24 region, currently home to Terex Corporation's (NYSE:TEX) 320-day moving average.

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