Allergan Options Bull Wins Big on AbbVie Buyout Buzz

Options is running hot on both AGN and ABBV today

by Karee Venema

Published on Jun 25, 2019 at 2:53 PM

Wall Street is buzzing today with news of Abbvie Inc's (NYSE:ABBV) $63 billion buyout bid for Allergan plc (NYSE:AGN). The news has AGN stock at the top of the Big Board, and options traders swarming the Botox maker.

At last check, 42,750 calls and 33,000 puts were on the tape -- eight times what's typically seen at this point, and total options volume at a new annual high. The August 135 and 165 calls are most active, due in part to a two-legged spread that's likely being sold to close for $22.

According to Trade-Alert, a similarly sized block of August 135/165 call spreads was bought to open last Wednesday, June 19, for $3.45 per pair of spreads. If today's closing activity is at the hands of this options trader, they banked a 537% profit in less than a week.

At last check, AGN stock was trading up 26.6% at $164.06, the best stock on the New York Stock Exchange (NYSE), but remains below ABBV's $188.24 per AGN share purchase price. This may be why AbbVie stock is at the bottom of the Big Board, down 15.7% at $66.10, fresh off a two-year low of $66.

ABBV options traders are in overdrive, too, with 165,000 contracts on the tape, 14 times the average intraday amount. The August 70 and 75 calls are most active, and it looks like one speculator may be initiating a risky call ratio spread, eyeing a move back up to $75 by August expiration.

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