Yahoo! Inc. (Yahoo!) is a global technology company. Through the Company’s technology and insights, Yahoo! delivers digital content and experiences, across devices and globally. The Company provides online properties and services (Yahoo! Properties) to users, as well as a range of marketing services designed to reach and connect with those users on Yahoo! and through a distribution network of third-party entities (Affiliates). YHOO is currently trading around $38.88 in a 52-week range of $30.02 – 44.01. The company’s stock has been underperforming the market this year with shares declining 3.58% year to date.
YHOO shares have sold off recently in light of the Alibaba IPO. On Monday, a whopping 106 million Yahoo shares changed hands, almost triple the daily average. YHOO owns 22% of BABA, and investors are using YHOO to hedge against a possible downward movement in BABA. BABA has yet to become optionable, and traders are either selling stock short, or buying puts on YHOO to hedge their long BABA positions. We believe that this downward move in YHOO is temporary, and have gotten bullish on the stock
The Trade: Buying the YHOO Nov 40-43-46 Call Fly for $.42 debit
Risk: $42 per lot
Reward: $2.58
Greeks Of The Trade
Delta: Long
Gamma: Long
Theta: Short
Vega: Long