Altaba Stock Options Volume Pops After Yahoo Shift

AABA shareholders appear to be initiating options hedges on the stock

Jun 26, 2017 at 3:01 PM
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After Verizon completed its purchase of Yahoo's core operations unit, the remaining assets of the former internet name and now investment company -- which holds a sizable stake in Alibaba -- became known as Altaba Inc (NASDAQ:AABA). Since its June 19 open at $54, AABA stock has added 0.9% to trade at $54.50, and earlier hit a post-conversion high of $55.60. Altaba options volume has been on fire, too, with roughly 109,000 contracts traded on June 20 alone.

Most of the action centered at the now-expired weekly 6/23 70-strike call and put, and it looks like the action was tied to shares. Another options trader may have bet on a long-term volatility crush for Altaba shares, with the possible initiation of a short straddle using the January 2018 50-strike call and put. A similar trade was potentially placed last Thursday, June 22, using the January 2018 70-strike call and put.

In total, the October 52.50 put has seen the biggest rise in open interest over the past five days, with roughly 16,000 contracts added -- and is now home to peak open interest of 26,671 positions. Data from Trade-Alert indicates some of the activity could be a result of one AABA options trader selling to close the October 57.50 calls to fund the purchase of the new October puts.

Today, AABA options traders are taking a breather, with around 31,000 contracts traded so far -- one-third of the expected 93,000. There looks to be a possible long straddle being initiated at the January 2018 60-strike call and put, and is tied to Altaba stock.

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