Panera Stock Options Catch Fire as Takeover Interest Heats Up

Panera stock was halted earlier and is now over 8% higher at $282.96, after sources told Bloomberg the restaurant chain is a takeover target. Earlier, in fact, the stock hit an all-time high of $292.42. As the shares tear up the charts, PNRA options are seeing a groundswell of demand.

At last check, both PNRA stock and call volume were already at levels not charted in the past 12 months. Digging deeper, more than 19,000 calls are on the tape, 17 times the usual intraday rate. As such, the stock's 30-day at-the-money implied volatility earlier bolted to an annual high of 36.2%.

Most active are the April 270, 285, 295, and 300 calls. However, International Securities Exchange (ISE) data suggests predominantly buy-to-close and sell-to-open activity at each strike. So, not every PNRA options trader targeting calls is necessarily bullish.

The picture was more straightforward on Friday. In that session, PNRA call options traded at seven times the typical daily pace. Moreover, data from the major exchanges confirms speculators purchased new positions at the April 260 and 265 calls -- now both deep in the money.

In any case, the bias toward Panera calls over puts goes back at least a couple weeks. At the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX), the stock has amassed a 10-day call/put volume ratio of 2.11 -- in the high 88th percentile of its 12-month range. Not to mention, PNRA's Schaeffer's put/call open interest ratio (SOIR) of 0.64 ranks in the call-skewed 15th annual percentile.

While some call buyers are "vanilla bulls" -- understandable, given Panera stock's technical strength -- others could've been driven by ulterior motives. Specifically, nearly 16% of the shares' float is sold short, which would take two weeks to cover, at typical trading levels. Put more simply, some short sellers may have purchased PNRA call options to hedge their bearish stock positions against an unforeseen rally, not unlike the one transpiring today.