Monsanto Company (MON) Call Volume Set for Annual High Amid Bayer Buzz

Monsanto Company (NYSE:MON) option bulls are bombarding the stock after Bayer AG's latest buyout offer of $65 billion

Sep 6, 2016 at 12:24 PM
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Monsanto Company (NYSE:MON) call options are flying off the shelves, after German pharmaceutical company Bayer AG said it's willing to increase its buyout bid yet again, this time offering the seed company $65 billion, or $127.50 per share, up from previous per-share offers of $122 and $125, made in May and July, respectively. The stock is currently up 0.4% at $107.88.

In the options pits, volume is on pace to hit an annual high. Calls are flying off the shelves at 10 times their usual intraday rate, with over 52,000 calls crossing the line, compared to fewer than 7,000 puts -- putting call volume on track for its highest reading in the last 12 months. Short-term options are especially hot, with MON's 30-day at-the-money implied volatility in the top 25% of its annual range, and with out-of-the-money September and October calls accounting for seven of the 10 most active options.

However, today's appetite for calls is just more of the same. MON's Schaeffer's put/call open interest ratio (SOIR) of 0.33  is lower than 86% of all other readings taken in the past year, suggesting near-term traders have rarely been more call-skewed over the last 12 months. Echoing this increased affinity for calls is MON's 10-day call/put volume ratio at the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX) of 3.04, which is in the top two-thirds of its annual range.

MON is up nearly 9.5% year-to-date, rallying in May after rejecting the initial aforementioned Bayer AG buyout offer. The stock also rallied again on Aug. 23 on M&A buzz. MON has advanced by over 24% since hitting a three-year low of $81.22 last September. However, Monsanto Company (NYSE:MON) does seem to have run into a roadblock at the $109 level since mid-June, as shareholders take a wait-and-see approach.

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