Options Review (CP, YHOO, VLO)

NASDAQ:YHOONew York, October 31st (TradersHuddle.com) – Some of the stocks garnering options activity during the session.

Canadian Pacific Railway Limited (USA)  (NYSE:CP) shares are showing very volatile moves on the news that Hedge fund manager William Ackman’s Pershing Square Capital Management has taken a 12.20% stake in the company. Shares of CP jumped 4% earlier in the opening session, but turned lower within few minutes and trading lower by 0.67% to $64.14. Options trading patterns on Stamps.com this morning suggest that, options traders expects the stock to jump in the near term. The Dec. $65 strike call is the most active with 71 contracts added against open interest open of 1,077 at an average price of $1.10 in the first trading hour. The Nov. $65 strike call also added 211 contracts added against open interest open of 99 at an average price of $1.50.

Yahoo! Inc.  (NASDAQ:YHOO) shares slumped 5.50% to $15.65 following the reports that the company is looking for to selling off Asian assets and use the inflow to pay dividend, instead of highly anticipated selling itself. The Nov. $16 strike call is the most active call option, signaling that traders are selling the call with 1,579 traded hands against open interest of 113,295. The Nov. $16 strike put also added 1,692 contracts with open interest of 22,488.

Valero Energy Corporation  (NYSE:VLO) shares slumped 4.53% to $25.49 after last week’s hefty gains on reports that Reliance Industries may be in talks to acquire US refiner Valero at $48 per share. Today’s options strategies signaling that call buyers are winding their call options created last week. The Dec. $28 strike call is the most populated with 84 contracts being added against open interest of 21,584 at an average price of $1.32, versus previous trading session price of $1.64. The Dec. $23 strike call also added 506 contracts against open interest of 7,929 at an average price of $1.19, signaling traders are expecting the stock to fall below $21.81 over the next one month to achieve break-even or profit.

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