Someone is betting on more M&A activity in the options market. Microchip Technology Inc. (NASDAQ: MCHP) has traded 9,377 contracts of the NOV10 $34 CALLS today. The whole open interest was only 9,170 contracts. While far smaller, even the $35 CALLS saw 560 contracts trade versus an open interest of only 612 contracts.
If you go out to December, it is even more of a standout even if the volume is actually less. In the DEC10 $34 CALLS, we saw 3,219 contracts trade versus an open interest of only 1,401 contracts. In the DEC10 $37 PUTS we saw 1,166 contracts trade versus an open interest of only 903 contracts.
As far as Microchip the stock, its shares are up 0.36% at $33.67 versus a 52-week range of $25.27 to $34.38. At 12:25 PM EST we have also seen 1,039,213 shares trade hands versus 2,697,200 for an average day’s volume.
Options may be signaling something that has not been reflected in the stock itself. Keep in mind that Microchip Technology carries a yield of about 4% and its market cap is close to $6.3 billion.
JON C. OGG
12:25 PM EST