Marketo Inc (MKTO) Buyout Sends Options Volume Through the Roof

Marketo Inc (MKTO) agreed to be purchased by Vista Equity Partners

May 31, 2016 at 11:14 AM
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Options volume on Marketo Inc (NASDAQ:MKTO) is skyrocketing, after the marketing specialist agreed to a $1.8 billion buyout with Vista Equity Partners. MKTO stock is on the up and up, too, last seen 9.3% higher at $35.19 -- just below the per-share purchase price of $35.25. Earlier, in fact, the shares touched an annual peak of $35.30.

As alluded to, options traders are extremely active toward MKTO today. Calls, in particular, are flying off the shelves at 14 times the expected intraday rate. What's more, the current volume ranks in the 100th percentile of its annual range. Not surprisingly, with the purchase price being what it is, the 35 strike is leading the way. Specifically, the two most active MKTO options are the June and July 35 calls, combining for roughly 5,800 contracts exchanged so far.

Recent call buyers are likely basking in the glow of the M&A buzz. During the last 20 sessions, options traders have bought to open roughly six MKTO calls for each put at the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX). Echoing this call bias, the stock's Schaeffer's put/call open interest ratio (SOIR) checks in at 0.32 -- in the low 13th percentile of its annual range.

Analysts have taken a glass-half-full approach toward MKTO, too. Six brokerage firms currently maintain "buy" or better opinions, versus two "holds" and not a single "sell" recommendation.

And there's a reason for that: Even prior to today, Marketo Inc (NASDAQ:MKTO) was a technical standout. Specifically, since hitting a record low of $12.86 on Feb. 10, the stock had advanced 150%, as of Friday's close at $32.20. With today's upward gap, that lead has been extended to nearly 174%.

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