Range Resources Corp. call trading jumped to a two-month high on speculation that the U.S. shale-gas producer may be acquired.
More than 25,000 calls to buy the stock changed hands, 24 times the four-week average and 7 times the number of puts to sell. The shares rose 4.4 percent to $36.94 as of 4 p.m. in New York. Today’s most-active contracts were November $40 calls, which rose 62 percent to $1.05 and accounted for a quarter of today’s volume. The stock hasn’t closed above $40 since July.
The options trading was spurred by “unsubstantiated takeover rumors,” strategists at Susquehanna International Group LLP in Bala Cynwyd, Pennsylvania, wrote in a note to clients.
Announced acquisitions of oil and gas assets owned by U.S. companies surged to about $51 billion this year, according to data compiled by Bloomberg. In December, Exxon Mobil Corp. agreed to buy U.S. gas producer XTO Energy Inc. in a stock deal initially valued at $31 billion.
“This has been a favorite recycled takeover noise name for quite some time,” said Michele Skupp, a senior options strategist at Miller Tabak & Co. in New York. “It’s today’s rumor du jour.”
Karen Giles, a spokeswoman for Fort Worth, Texas-based Range, declined to comment on the speculation.
“We don’t know anything specifically” about the options trading, Range Resources Chairman and Chief Executive Officer John Pinkerton said in an interview. “I do think there’s starting to be a general consensus in the market that natural gas is undervalued. There are some investors that believe now is a good time to be buying natural-gas stocks.”
Most of the call trades were from investors initiating new positions, “so that suggests that there’s something going on that we don’t know about,” said Brett Marcus, an options trader at Needham & Co. in New York. “The rumor mill is always flowing.”
Range Resources fell the most in more than a year on July 27 after reporting second-quarter earnings that missed the average analyst estimate. The company trailed projections because it sold gas at lower prices than expected, Fadel Gheit, an analyst for Oppenheimer & Co. in New York, wrote in a note to clients following the earnings release. Range had said it sold gas for 25 percent less than a year earlier.
Implied volatility, the key gauge of option prices, for at-the-money options expiring in 30 days rose to 39.59 today, the highest level in almost a month.