Options Traders Anxious Ahead of Staples, Inc., Office Depot Inc Ruling

A judge is expected to rule later today on the merger between Staples, Inc. (NASDAQ:SPLS) and Office Depot Inc (NASDAQ:ODP)

May 10, 2016 at 2:31 PM
facebook X logo linkedin


The fate of a Staples, Inc. (NASDAQ:SPLS) and Office Depot Inc (NASDAQ:ODP) union could be decided upon later this afternoon, with a judge expected to issue a ruling on the highly contested merger by 4:30 p.m. ET. Ahead of the looming announcement, SPLS stock is up 0.7% at $10.37 -- while ODP is down 3.5% at $6.04 -- and anticipation is building in the former's options pits. In fact, SPLS' 30-day at-the-money implied volatility topped out at a 52-week peak earlier.

By the numbers, roughly 9,000 calls have changed hands today -- 1.3 times the average intraday pace -- compared to about 3,500 puts. Most active is SPLS' September 14 call, where it looks like one options trader bought to open a 5,000-contract block for $175,000 (number of contracts * $0.35 premium paid * 100 shares per contract). This also represents the options trader's maximum risk, should the stock stay south of $14 through September options expiration.

More broadly speaking, put buyers have been taking aim at SPLS at a faster-than-usual clip in recent weeks. At the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX), the equity's 10-day put/call volume ratio of 0.46 ranks in the 86th percentile of its annual range.

What's more, SPLS' Schaeffer's put/call open interest ratio (SOIR) is docked at 1.27. Not only does this show that puts outweigh calls among options expiring in three months or less, but it ranks above all other comparable readings taken in the past year. Simply stated, short-term speculators are more put-heavy now toward SPLS than they've been at any other point over the last 12 months.

On the charts, Staples, Inc. (NASDAQ:SPLS) has been a long-term laggard, shedding nearly 38% year-over-year amid pressure from its 50-day moving average. While this trendline gave SPLS stock a quick lift from February through April of this year, it appears to have resumed a more resistive role.

SPLS daily chart

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.

 

Target Effortless Triple-Digit Gains Every Sunday Evening For Life!

This is your chance to triple your profit potential on Sunday evenings, without spending all your free time watching the market.

On Sundays, as a Weekend Plus subscriber, you’ll get up to 6 trades every Sunday, each targeting gains of 200% or more.

Start targeting gains like the ones our subscribers have seen recently, including:

213.3% GAIN on AutoNation calls
100.0% GAIN on Monster Beverage calls
100.4% GAIN on Walgreens Boots Alliance puts
100.4% GAIN on ON Semiconductor calls
257.7% GAIN on Dell calls

101.0% GAIN on Apollo Global Management calls
103.6% GAIN on JP Morgan  Chase calls
105.3% GAIN on DraftKings calls
101.3% GAIN on Airbnb calls
203.0% GAIN on Shopify calls
102.0% GAIN on Cboe Global Markets calls
100.9% GAIN on Boeing calls
102.1% GAIN on Microsoft puts
102.3% GAIN on First Solar calls
101.5% GAIN on PulteGroup calls
101.0% GAIN on Apple calls
209.4% GAIN on NXP Semiconductors calls
100.8% GAIN on Uber Technologies calls
100.4% GAIN on Academy Sports and Outdoors puts
102.2% GAIN on Trade Desk calls
100.8% GAIN on DoorDash calls
100.0% GAIN on Camping World Holdings puts
100.0% GAIN on Cboe Global Markets calls
100.2% GAIN on C3.ai calls
238.5% GAIN on Oracle calls

 
 
 


 
 

Rainmaker Ads CGI