Delek US Holdings, Inc. (DK) Calls Pop On Icahn Buyout Buzz

Carl Icahn-backed CVR Energy, Inc. (NYSE:CVI) is reportedly contemplating a bid for Delek US Holdings, Inc. (NYSE:DK)

by Karee Venema

Published on Aug 12, 2016 at 1:22 PM

Shares of energy stock Delek US Holdings, Inc. (NYSE:DK) are jumping, after the New York Post reported CVR Energy, Inc. (NYSE:CVI), in which Carl Icahn owns a controlling stake, is preparing to make a bid for the oil refiner. Additionally, Icahn -- who was recently tied to this casino stock -- appears to be increasing his stake in DK, according to The Post. At last check, DK was up 7.9% at $16.07, and with stock volume at an annual high, its options pits are bustling.

By the numbers, 2,118 call options have crossed the tape on DK -- two times what's typically seen at this point in the day. As a point of comparison, fewer than 450 put options have changed hands. Most active is the equity's August 20 call, although it looks like speculators may be selling to close positions here.

More broadly speaking, DK's in-the-money October 12.50 call is home to the stock's top open interest position of 5,411 contracts. Per Trade-Alert, it looks like the majority of the action has been of the buy-to-open kind, meaning speculators are betting on the equity settling north of $12.50 at the close on Friday, Oct. 21, when the options expire. Regardless of where DK settles, though, the most call buyers have risked is the initial premium paid.

Outside of the options arena, sentiment is skewed toward the skeptical side. Short interest, for instance, jumped 12.1% in the two most recent reporting periods, and now accounts for a healthy 12.8% of the stock's available float. In fact, nearly 6 million DK shares are sold short -- a record high. Elsewhere, 73% of analysts maintain a "hold" or "sell" suggestion toward DK.

Technically, Delek US Holdings, Inc. (NYSE:DK) has put in a dismal performance over the past year, shedding roughly 55% of its value. Plus, the shares hit a four-year low of $11.41 during the late-June broad-market sell-off, and today's rally was contained near the $17 mark -- a region that has given DK trouble since mid-January.

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