Options traders are blasting Moneygram International Inc (NASDAQ:MGI) today, as the penny stock pops -- last seen up 99.5% at $2.82. Boosting the equity is news that company inked a two-year deal with blockchain firm Ripple. In addition to Ripple buying $30 million of MGI shares for $4.10 apiece, representing a roughly 183% premium to Monday's close, Moneygram will use the blockchain name's xRapid cross-border payments platform to send and receive currencies.
In reaction, 2,124 puts and 1,612 calls are on the tape, nearly 52 times the average daily volume, with put and total options volume already at an annual high. The June 2.50 put is most active, and it looks like new positions are being purchased here for a volume-weighted average price of $0.12. If this is the case, breakeven for the put buyers at the close this Friday, June 21, is $2.38 (strike less premium paid).
Given today's massive gains, it's possible some of these puts are being used by MGI shareholders to protect paper profits. Whatever the reason, short-term volatility expectations have exploded. At last check, the implied volatility term structure for monthly June options is 323.7%, compared to 164.5% for standard July options.
Looking at the charts, today's bull gap has Moneygram stock on track for its biggest one-day gain ever. However, the shares are running out of steam near their 200-day moving average, and remain 61.8% lower on a year-over-year basis.