Option traders are pretty darn smart. Just look at the action before and after today's $BRCM $AVGO news. Today someone was grabbing CALL contracts quicker than a FIFA official takes a bribe.
Anyone buying weekly calls before today's viagra candle is sitting on a hefty profit this evening.
Someone woke up this morning and said "Self? Yes self? I need to buy and buy and buy some $48 calls on $BRCM, because... a little birdy told me too. Yes the calls were on sale this morning and the buyers were coming. But the action really started to heat up just after lunch and minutes before the stock spiked. It's just efficient news hungry robots I imagine. Intelligent option traders buying up contracts before people realized the common stock was going to rocket 20% higher. Yep. You be the judge.
More from Schaeffers Research....
Specifically, BRCM has seen roughly 51,000 calls cross the tape -- more than five times the intraday norm, and about five times the number of puts exchanged. It looks like bulls are buying to open 55-strike calls in both the weekly 5/29, June, and July series, gambling on an extended climb north of $55 in the near term. What's more, the equity's 30-day at-the-money implied volatility has more than doubled to 54.6% -- an annual high.
Even before today's M&A surge -- which echoes that of Juniper Networks, Inc. (NYSE:JNPR) -- Broadcom Corporation (NASDAQ:BRCM) option traders were betting bullishly. On the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX), the equity's 10-day call/put volume ratio of 8.41 stands higher than 86% of all other readings from the past year.