Arm Holdings Sees Options Frenzy Amid Surge in Bets Stock Could Rally to $150
Investors are piling on bullish wagers on $Arm Holdings (ARM.US)$ as the stock extends its meteoric rise that was driven by better-than-expected earnings for the company that designs chips used in almost all of the world's smartphones.
Call options that give holders the right to buy Arm stock at $150 by Feb. 16 jumped almost five-fold on Monday as the stock rallied a further 26%, almost doubling its value in the past five days. The price of the option that has 100 shares each, more than tripled to $22.50 per stock, tracking the gains in underlying security.
Almost 42,000 contracts of such call options changed hands by 2:40 pm New York, making it the most-active option for Arm shares. That's a huge jump from the 6,870 contracts traded on Friday, when the stock closed at $115.21. Volume soared from zero on Feb. 7, when the stock was just at $77.
Even the bears are in retreat. The volume of put options that give holders the right to sell Arm at $130 climbed to more than 18,000 contracts, a jump of more than 100 times from Friday. The price of such puts fell to $6.97 from more than $17 on Friday.
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Former editor at Bloomberg, ex-commentary editor at Lazard. Posts aren’t investment advice. Views are just mine.
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