Options volume is running at six times the intraday average volume
Options traders are blasting World Wrestling Entertainment, Inc. (NYSE:WWE) today, with 17,000 calls and 12,000 puts exchanged so far -- six times the average intraday volume. The July 70 put is the most popular, followed closely by the April 90 call, with new positions being opened at the former.
This uptick in options activity follows news that the professional wrestling company is merging with UFC parent Endeavor Group (EDR). The new sports and entertainment company, valued at $21 billion and led by Vince McMahon and Ari Emanuel, is expected to go public.
Shares of World Wrestling Entertainment are falling after the news, and were last seen 4.7% lower to trade at $86.93, earlier as low as $82.81. On a closing basis, the $82 level has kept WWE afloat in 2023, and the stock remains 27.6% higher year-to-date.
Today's penchant for calls is far from being the norm. Over at the International Securities Exchange (ISE), Cboe Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX), the security's 10-day put/call volume ratio of 1.83 sits higher than all but 6% of annual readings, suggesting puts have been getting picked up at a much quicker-than-usual clip.
Now looks like an ideal time to speculate on the stock's next moves with options, given its Schaeffer's Volatility Index (SVI) of 37% stands in the relatively low 21st percentile of readings from the past year. This means options traders are pricing in low volatility expectations for WWE right now.
Analysts are split, with five sporting a "strong buy" rating and five recommending a "hold." What's more, the 9.08 million shares sold short make up a hefty 21.3% of World Wrestling Entertainment stock's available float, or nearly two weeks' worth of pent-up buying power.