While Yahoo! Inc.?s stock has climbed back from last month?s spinoff scare, options trading shows the issue is still on investors? minds.
On Tuesday, June 2, Bloomberg reported that while Yahoo! Inc.?s stock has climbed back from last month?s spinoff scare, options trading shows the issue is still on investors? minds.
Bearish Yahoo contracts are about the most expensive relative to bullish ones in nearly two years, data compiled by Bloomberg show. The gap, a sign traders are buying insurance against a falling stock, has remained wide even after the shares erased most of a 7.6 percent plunge from May 19. That drop was triggered by new tax scrutiny for spinoffs at a time Yahoo is planning to create a separate company for its Alibaba Group Holding Ltd. stake.
?There?s uncertainty because of the IRS rule change that might be coming into effect under certain circumstances,? said Brian Wieser, an analyst at Pivotal Research Group who has a hold rating on the shares and a price target of $49. ?You wouldn?t think the IRS would want to apply rules retroactively to something that?s been announced, but on the other hand, it hasn?t been completed.?
Options protecting against a 10 percent decline in Yahoo shares cost 1.6 points more than those wagering on a 10 percent rise, three-month data compiled by Bloomberg show. The relationship known as skew touched the highest level since July 2013 on May 21.
Yahoo slid 0.3 percent to $43.24 at 9:35 a.m. in New York.