Quote:
Pixar deal talk animates traders
Maker of "Toy Story" has share price and options volume rise amid rumors it may be bought by Disney.
January 5, 2006: 7:36 AM EST
CHICAGO (Reuters) - Shares of Pixar rose to a record and options volume jumped amid speculation that the maker of "Toy Story" and other animated hits might be acquired by Walt Disney Co., traders said. Still, many were skeptical a deal would happen.
Both companies declined comment.
Pixar shares edged up after-hours to $58.23 after rising $4.20, or 7.78 percent, to a record close of $58.16 on Nasdaq. It was Pixar stock's biggest one-day gain since November. Disney fell 41 cents, or 1.68 percent, to close at $23.99 a share on the New York Stock Exchange.
"Pixar is up ... on unconfirmed takeover chatter," said options strategist Paul Foster at financial-information Web site theflyonthewall.com.
The rumor lifted options volume as some investors bought calls in anticipation of more gains while others bought puts to protect their stock holdings from downside risk, traders said.
On Wednesday, 9,506 calls and 11,463 puts changed hands in the U.S. options market, outpacing Pixar's normal volume of 2,022 contracts, according to market research firm Track Data.
Pete Najarian, co-founder of insideoptions.com, a financial information Web site, noticed heavy call buying in the contracts that give the right to buy Pixar shares by mid-January.
But many traders who appeared skeptical of the rumor played it safe, zooming in on Pixar's near-term puts allowing them to sell the stock for $50 in the next few weeks.
"Traders love to hedge their bets and appeared to have bought the January 50 puts which are underneath the current stock price as a protective measure," said Najarian.
In the equities market, analyst David Miller of Sanders Morris Harris said he did not expect a takeover despite the stock movement.
"I don't think there's a takeout. We think it's a market inefficiency and we don't think Pixar's for sale. It was simply a rumor planted by another shop," said David Miller, analyst with Sanders Morris Harris.
The two companies are currently in discussions for a new distribution agreement. Their current pact expires next summer with the release of "Cars."
A report by the Los Angeles Times suggested the talks could lead to Disney taking a stake in Pixar.
Maker of "Toy Story" has share price and options volume rise amid rumors it may be bought by Disney.
January 5, 2006: 7:36 AM EST
CHICAGO (Reuters) - Shares of Pixar rose to a record and options volume jumped amid speculation that the maker of "Toy Story" and other animated hits might be acquired by Walt Disney Co., traders said. Still, many were skeptical a deal would happen.
Both companies declined comment.
Pixar shares edged up after-hours to $58.23 after rising $4.20, or 7.78 percent, to a record close of $58.16 on Nasdaq. It was Pixar stock's biggest one-day gain since November. Disney fell 41 cents, or 1.68 percent, to close at $23.99 a share on the New York Stock Exchange.
"Pixar is up ... on unconfirmed takeover chatter," said options strategist Paul Foster at financial-information Web site theflyonthewall.com.
The rumor lifted options volume as some investors bought calls in anticipation of more gains while others bought puts to protect their stock holdings from downside risk, traders said.
On Wednesday, 9,506 calls and 11,463 puts changed hands in the U.S. options market, outpacing Pixar's normal volume of 2,022 contracts, according to market research firm Track Data.
Pete Najarian, co-founder of insideoptions.com, a financial information Web site, noticed heavy call buying in the contracts that give the right to buy Pixar shares by mid-January.
But many traders who appeared skeptical of the rumor played it safe, zooming in on Pixar's near-term puts allowing them to sell the stock for $50 in the next few weeks.
"Traders love to hedge their bets and appeared to have bought the January 50 puts which are underneath the current stock price as a protective measure," said Najarian.
In the equities market, analyst David Miller of Sanders Morris Harris said he did not expect a takeover despite the stock movement.
"I don't think there's a takeout. We think it's a market inefficiency and we don't think Pixar's for sale. It was simply a rumor planted by another shop," said David Miller, analyst with Sanders Morris Harris.
The two companies are currently in discussions for a new distribution agreement. Their current pact expires next summer with the release of "Cars."
A report by the Los Angeles Times suggested the talks could lead to Disney taking a stake in Pixar.
I only have two words for this situation: ******** no!
Only Satan could ruin the bliss of the majority of the films Pixar has produced to date. Disney is the Great Satan. Enough said.
