Did Unusual Options Activity Predict the Endeavor WWE UFC Merge?

Rebel Hub Education

by

Justin Nugent

April 3, 2023
at 1:38 PM

Breaking: Endeavor is bringing the pain with its recent acquisition of World Wrestling Entertainment (WWE) for a whopping $9.3 billion! Endeavor is also the proud owner of Ultimate Fighting Championship (UFC), the world’s most famous mixed martial arts league, which it took control of back in 2016. By combining WWE with UFC, Endeavor is creating a powerhouse of a company worth more than $20 billion!

Endeavor plans to spin out the newly combined company, which has yet to be named, on the public market. It’s expected to be traded under the catchy name “TKO.” Once the deal is finalized, Endeavor will hold a controlling interest of 51% in the company, and WWE shareholders will hold the remaining 49%.

The bigwigs in charge are staying put, with Endeavor CEO Ariel Emanuel expected to lead the company and Vince McMahon as the executive chair of the board. Dana White will continue to serve as the President of UFC, and Nick Khan will remain as the President of WWE.

The sale marks the end of an era for the McMahon family, who have owned WWE for multiple decades. But fear not, fans – the show will go on with bigger and better opportunities for TV and streaming rights. Endeavor is hoping to charge top-dollar for these rights with the scale the newly combined company will offer.

So get ready to rumble, because the deal is expected to close by the end of the year pending regulatory approval. And who knows, with this new partnership, we might even see some WWE vs. UFC matches in the future!fv

Why it Matters for Options Traders

Often, when two companies merge, the stock market quickly decides who the winner and loser is. In this case, the stock market picked Endeavor (EDR), which is ripping higher in the premarket on the news.

Why is that interesting?

Market Rebellion spotted big unusual options activity in this relatively small stock, in the form of call options bought last month that expire in May! Since those purchases, EDR is trading significantly higher, and both trades are worth more currently than they were at the time of purchase. Check out what we saw below: