Hershey Co (HSY) Call Options Explode Amid Takeover Talk

Rumor has it Nestle may attempt a Hershey Co (HSY) takeover

Jun 9, 2016 at 2:10 PM
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Chocolate chief Hershey Co (NYSE:HSY) call options are trading at 71 times the usual intraday rate -- and that's not a typo. Specifically, 26,000 calls are on the tape, versus an expected amount of just 361. Sending the options pits into overdrive are rumors of a potential takeover bid from Nestle, on which a HSY spokesperson declined to comment.

Digging a little deeper, intraday call volume is at its highest point in the past 12 months, with traders taking aim at the $100 century level. Specifically, buy-to-open activity is detected at the June and July 100 calls, suggesting speculators foresee HSY stock toppling that mark -- and notching a new annual high -- by the respective expiration dates.

This is par for the course when it comes to HSY options traders. During the last two weeks at the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX), speculators have bought to open more than nine calls for every put. The resultant call/put volume ratio of 9.06 outstrips 91% of readings from the past year.

The brokerage crowd isn't nearly as bullish. Of the 11 analysts tracking HSY stock, nine have handed out either a "hold" or "sell" rating. Plus, the consensus 12-month price target of $90.38 rests south of the shares' current perch.

On the charts, today's buyout buzz has Hershey Co (NYSE:HSY) stock 2.2% higher at $95.75. In fact, the shares are headed for their highest close since October, and now sport a market-beating year-to-date advance of 7.3%.

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