MEMC Electronic Materials Soars On Takeover Speculation (WFR)
Dr. Duru
Last week, I noted heavy call activity in MEMC Electronic Materials(WFR) that was notable enough to lure me into buying. Today, WFRcontinued its impressive recovery from an earnings warning with an 8%one-day pop giving it a 17% run since the close following warning.Briefing.com attributed today’s trading to takeover speculation.
Whatever the reason for the pop, trading is aggressive with optionskicking into high gear again. Over 20,000 calls have traded acrossSeptember strikes from 17 to 20 versus 22,376 contracts in openinterest. This compares to a lowly trading volume of just over 2000 putcontracts across the same strikes.
I was not patient enough to profit from today’s move as I sold mycalls yesterday. Given the aggressive bullish nature of the tradingfollowing an earnings warning, I have to believe WFR remains a stock towatch this week.
On a related note, it seems that speculative fervor has kicked intoa higher gear this week with lots of stories and reports of highoptions trading, rumors galore, and large one-day moves in stocks,especially those with short interest. It will be interesting to seewhether we experience a serious hangover after this week’s expirationof September options.
Be careful out there!
Full disclosure: no positions
Dr. Duru Dr. Duru attended Stanford University, receiving a B.S. inMechanical Engineering, an honors degree in Values, Technology, Scienceand Society, and a Ph.D. in Engineering-Economic Systems (nowManagement, Science, and Society). He has done some independentconsulting in mathematical modeling, slogged through management consultingin product development and technology strategy, and is now pounding thepavement helping companies to improve the monetization of onlineadvertising through analytic software and rigorous analysis.