Calls Active as Ecolab Pops (ECL)

Shares of Ecolab (ECL) are popping higher this morning on word that the company has agreed to acquire privately held Champion Technologies for $2.21 billion. ECL is higher by 3.22%, trading at $65.72.

ECL management remarked on the deal, saying, “The deal is terrific financially as well. Like our current Nalco Global Energy Services business, Champion offers very attractive growth and an annuity-like revenue model generating steady and predictable earnings patterns similar to our legacy Ecolab businesses.”

Management also raised their Q3 adjusted EPS forecast to $0.87, up from prior guidance of $0.83-0.87 per share; the Street was already looking for $0.87, though.

Call volume is skyrocketing today, running at over 41x normal volume with 3,146 contracts traded. Over 75% of all calls traded have been purchased on the offer.

The heaviest action is coming on the October $67.50 strike, where over 1,600 contracts have traded on open interest of 1,420. Next in line is the November $67.50 call, where 860 contracts have traded on open interest of just 127. While action has consisted primarily of small lots, traders have been increasingly eager to pick up calls on the offer, even as offers rise.

30-day implied volatility is jumping rather dramatically as well, currently up 9.7% to 21.53%. 10-day historical vol remain just below 9%.

Ecolab Inc. develops and markets products and services for the hospitality, foodservice, healthcare and industrial markets. 

About Michael Zerinskas

Originally from Chicago, Michael J. Zerinskas began his career as an intern for a small high-frequency trading firm based at the CME; he then moved on to become Chief Options Strategist at Benzinga.com. Michael is now Unusual Activity Editor at The Options Insider, specializing in VIX, volatility, and flagging unusual activity.