Speedway Sale Speculation Sparks Marathon Petroleum Corp (MPC) Options Trading

Marathon Petroleum Corp (MPC) shares are sizzling, as the company considers putting Speedway on the block

Jan 3, 2017 at 3:25 PM
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Energy stock Marathon Petroleum Corp (NYSE:MPC) is storming higher this afternoon, despite a dismal day for crude oil prices. At last check, the shares had advanced 5% to trade at $52.88, following the company's update on potential strategic actions -- including the potential sale of its Speedway retail business amid pressure from Elliott Management. The major move on the charts -- including a fresh annual high of $54.59 -- has MPC's options pits kicking into overdrive.

Drilling down, intraday stock and options volume are running in their respective 97th and 95th annual percentiles. Regarding the latter, calls are especially popular, changing hands at quadruple the usual intraday rate -- though the most popular strike by a healthy margin is the April 52.50 put.

Today's preference for MPC calls over puts is reflected in longer-term data from the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX). Over the last 10 weeks at those exchanges, traders have bought to open 6.67 calls for every put.

That said, those scooping up short-term options bets today may be paying a steep price. MPC's Schaeffer's Volatility Index (SVI) sits at an annual high of 1.07. In other words, the options market is pricing in extremely lofty volatility expectations right now, particularly within the front-month January series.

Turning our attention outside of options land, hopes are high on Wall Street. Ten of 14 analysts rate Marathon Petroleum Corp (NYSE:MPC) a "strong buy," without a single "sell" recommendation on the books. Plus, just 2% of the stock's float is dedicated to short interest.

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