It’s been a slow morning for unusual, large options trades, but we did see on very large call buyer come into EBAY Inc. (EBAY), just before 10 am today, Thursday August 14.
The trader has a strong “feeling” that Ebay, Inc (EBAY) is going higher by October. The trader bought a 5,396 EBAY October $55 calls. They paid around $1.20 cents for those calls, mostly at the ask. That makes for a hug bet with a transaction value of about $648,000.
Ebay, Inc (EBAY) is currently trading at $52.97 up just 3 cents today, and trading in a very tight range today. EBAY has a 52 week high of $59.70, and a low of $48.06 on the year. It’s trading normal average volume with 4.1 Million shares trading by 11:25 pm today.
Ebay, Inc (EBAY) already announced quarterly earnings back on July 16, so clearly this is not one of those short term earnings plays here. The company is scheduled to announce Q3 earnings on October 15, 2014. October 15th is way too far out for a trader to buy this many calls so clearly they are expecting some other positive event in the near term.
So what does this trader know that no one else seems to know? May be some deal / partnership or other material news is “anticipated” to be released soon? Or it could just be the usual analyst upgrade leak.
Forty three analysts currently follow Ebay, Inc (EBAY). The average rating on EBAY is “overweight” and the average price target is $59.47. EBAY shares are trading at a PE of around 18 now, with a PE for next year forecast at 16. There is definitely wiggle room for a nice analyst upgrade / price target increase in the very near future. We have a hunch it’s an analyst firm buying these calls up in front of their news release on said upgrade and price target increase. The last analyst action was August 13, when Stifel Nicolaus initiated its coverage with a HOLD rating and a price target $57.00. Based on the current ratings we can’t really see which firm would be looking at upgrading EBAY at this time.
This trade doesn’t really interest us. While it is a big call buy, it’s not clear if this is based on some insider knowledge, or if it’s just tied to stock, or some other reason. We’re staying away from this for now.