Yahoo Weekly Calls In Focus as Shares Move Sharply Higher
Yahoo (Ticker: YHOO) shares took off running on Tuesday, reversing Monday?s selloff amid the broad-based relief rally in US equities. The stock rose as much as 4.0% to $39.79 during the first half of the session to touch the highest level in five weeks. Options on the stock are changing hands at a clip, with upwards of 70,000 contracts in play versus YHOO?s average daily reading of around 54,000 contracts. Trading in calls is outpacing that of puts, with the call/put ratio near 3.7 as of 3:10 p.m. EST.
Among the most traded options contracts on Yahoo today are the weekly calls expiring at the end of this week. Of the weekly series, the 07Mar?14 $40 strike calls are the most traded by volume, with more than 13,000 lots traded against open interest of just 974 contracts. Time and sales data from today suggests most of the volume was purchased at an average premium of $0.40 per contract. Buyers of the $40 weekly calls stand ready to profit at expiration this week in the event that YHOO shares rally another 2.0% over the current price of $39.63 to exceed the breakeven point at $40.40.
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