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Friday, December 1, 2023

Short-Dated Bullish Strategies On YHOO Working For Some Traders As Shares Extend Rally

YHOO – Yahoo! Inc. – Buyers of weekly call options on Yahoo yesterday are seeing substantial overnight paper profits on those positions today, with shares in YHOO climbing 3.7% on Thursday morning to $30.27, the highest level in more than five years. The stock is up on comments from CEO Marissa Mayer at the TechCrunch Disrupt conference in San Francisco on Wednesday.

The largest overnight increase in weekly call open interest on YHOO was in the Sep 13 ’13 $29 strike calls after traders yesterday purchased around 1,000 contracts for an average premium of $0.42 each. Traders long the calls at $0.42 apiece are now holding contracts worth twice as much, with the last traded price on the $29 calls at $0.98 as of the time of this writing.

Overall options volume on Yahoo is roughly 130% of the stock’s average daily volume of around 44,000 contracts at present, with the call/put ratio hovering near 4.4. 

WEN – Wendy’s Company – Traders feasted on Wendy’s front month calls this morning, with shares in the quick service restaurant operator rising 5.5% to a new 52-week high of $8.71 during the first half of the session. The stock was upgraded to ‘Buy’ from ‘Hold’ at Argus today.  

Options players appear to have purchased around 2,600 of the Sep $8.0 strike calls, most at a premium of $0.60 per contract. In-the-money call buyers may profit at expiration if shares in the maker of the Frosty and pretzel bacon cheeseburgers top the breakeven price of $8.60. The Sep $9.0 strike calls are also active today after one trader purchased 400 contracts for a premium of $0.10 each. The bullish strategy may pay off at expiration next week if shares in WEN increase 4.5% over today’s high of $8.71 to trade above $9.10. 

P – Pandora Media Inc. – Shares in the largest online radio provider are up sharply this morning, trading up as much as 11% to $23.75, the highest level since the company’s IPO, after Pandora named Brian McAndrews chairman, president and CEO.

Traders positioning for shares in Pandora to extend gains snapped up calls on the stock straight out of the gate this morning. More than 2,100 of the Oct $24 strike calls changed hands during the first 10 minutes of the session, with most of the volume purchased for an average premium of $1.36 each. Buyers of the $24 calls stand ready to profit at expiration next month should shares in Pandora rally 7.0% over today’s high of $23.75 to exceed the average breakeven point at $25.36. Approximately 1,150 of the Oct $26 strike calls were also purchased near the open at a premium of $0.70 per contract. The $26 calls are profitable at October expiration if Pandora shares surge 12% to settle above $26.70. 

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