It's been a rough year for EMC investors. Shares of the data storage company are down 16 percent in 2015, but hope arrived in the form of takeover speculation this week, and that sent options traders making bullish bets.
"We saw above average call activity, and most of that was buying," strategist Stacey Gilbert said Thursday on CNBC's "Fast Money." Call activity on Thursday ran twice its daily average.
"There's a lot of speculation out there that EMC was considering a buyout by its own subsidiary VMware," said Gilbert. Re/Code reported earlier this week that EMC is considering a proposal for a downstream merger, in which it would be acquired by VMware, a company that it is a majority owner. Shares of the stock are up 10 percent since the report on Wednesday.
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Gilbert noted that this week, she saw unusual activity in in several options strikes, which indicate that options traders believe the stock is poised to rally. Specifically, there was action in the Aug. 28 weekly 25-strike calls, Sept. 4 weekly 25-strike calls and the Oct. 27-strike and 30-strike calls. "There's definitely some bullish positioning," said Gilbert, head of derivatives strategy at Susquehanna.
The speculation comes amid a hot year for deals. Global mergers and acquisitions were at $3.11 trillion on Friday, the second largest on record behind 2007 for this time of year, according to data from Dealogic.
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Wall Street tends to agree the stock is due for a pop. Of the 39 analysts that cover EMC, the average price target is $29.74 with an overweight rating, according to FactSet. Friday afternoon, it was trading at $24.96.
Disclosure: NBC News group is a minority stakeholder in Re/code and has a content sharing partnership with it.
