Adobe (ADBE) - Vol Explodes on Takeover Rumors with MSFT Right Now

ADBE is up 8.0% with IV30™ up a huge 74.4%. The LIVEVOL™ Pro Summary is below.



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Rumors abound of a deal with MSFT. Let's look to the Skew Tab (below). We can see a tremendous upside skew, totally reverse of "normal skew." The upside is super bid, back months haven't reacted yet.



Looking to the Options Tab (below), we can see the Oct 34 calls are $0.20 bid priced at 106 vol. HV10™ is 21.33. Nice... Keep in mind ADBE is actually at a "discount" right now given their collapse after the earnings release on 9-21-2010 AMC.



The stock went from $32.94 to $26.67 in a day. It's reasonable to assume a takeover price would be at a substantial premium to even the 34 strike. Happy spec to anyone who wants to trade this one.

One note - it may be possible to do an Oct/Nov 34 call spread for nearly even (sell Oct/buy Nov). If done for even, that's an arb.

This is trade analysis, not a recommendation.

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