Last night Yahoo (YHOO) reported their Q1 results and guidance which showed little fundamental change to the company’s multi-year malaise, and as expected most of the focus has been on the company’s potential sale of their core business.
Options volume exploded today, with calls out-numbering puts more than 2 to 1. The largest options block trade on the day came with stock up nearly 4% at 1pm a trader bought to open 20,000 of the July 40 calls to open for $1.45. These calls break-even at $41.45, up 10% from the trading level on July expiration.
Like many stocks that remain well off of their 52 week highs, YHOO had been forming a base of late, breaking above technical resistance with momentum indicators like the 50 day moving average crossing above the 200 day, which for some technicians is very BULLISH:
Short dated options prices seem fair, nearing 6 month lows, especially when you consider the uncertainty of the sale process of their core:
And in Verizon (VZ), a company who is widely to be the most motivated buyer of YHOO’s core, there was a large bearish roll in . When VZ was trading $52 shortly before 1pm, a trader sold to close 17,500 Jan17 35 puts at 31 cents, and bought to open 17,500 Jan17 43 puts for 87 cents. I suspect this sort of roll is a disaster hedge for a long holder, as the break-even at $42.13 is down 19%, and below the 2016 low of just below $44:
