Shares of Staples and Office Depot were surging Thursday morning, after activist fund Starboard Value took a 6 percent stake in Staples and boosted its stake in Office Depot to 10 percent. But the stocks, and especially the options on Office Depot, moved a bit ahead of the news.
Even as the broad market got hammered on Wednesday, Staples shares rose 2.4 percent, and Office Depot rallied 6 percent.
In the options market, the activity was even more pronounced. More than 60 times the average daily volume in Office Depot options traded, with the most popular contract being the January 8-strike call, according to options expert Mike Khouw.
In fact, 67,000 of the Office Depot January 8-calls traded on the day, which was enough to make them among Wednesday's most popular stock options contract. This happened even though they would expire as worthless if the stock didn't rally 23 percent from Wednesday's opening price. But with the stock opening Thursday at $7.44, it no longer seems so unlikely that the stock will rise to $8 by January.
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