BFT Unusual Option Activity Report

Foley Trasimene Acquisition II Corp (NYSE: BFT) saw a flurry of call option buying Monday as the SPAC moves closer to trading as Paysafe. According to reports, the deal that was announced on December 7, 2020, will see BFT trade under the name Paysafe on the New York Stock Exchange with the symbol PSFE. Following the merger, the deal funds the expansion of the digital wallet as it leverages its existing relationship with Microsoft Corp (Nasdaq: MSFT). Clearly the increased option interest today is looking to leverage the potential of a burgeoning company similar to Paypal Holdings, Inc (PYPL).

BFT Merger with Paysafe

The exclusive interest of SPACs like BFT is to merge with another company. As a “blank check” company, it intends to bring quality management and money to the deal with another, typically private, company. As a result, these types of companies can come to market quickly with no existing business and allow the private company to become public with less scrutiny.

If you’re not familiar with Paysafe, it’s a digital wallet, cash, and payment processing company. It has an existing relationship with Microsoft through igaming payments. It’s anticipated that a paysafe card option will be added to the Microsoft store in 22 countries throughout Europe. The new company has many investors through private placements, including a $350 million investment from Cannae Holdings Inc (NYSE: CNNE).

BFT Option Activity

At the time of this writing, the option volume was about 2.2 times the average. Most of the volume occurred on the call side with a put-to-call ratio of 0.15. Over 40% of the volume occurred between the market with 31% getting filled at the ask price. Here is a breakdown of the significant activity:

• 5,000 15 JAN 21 $17.50 calls mostly BOT at $0.15 to $0.50 against open interest of 2,070

This is an out-of-the-money option for this week’s expiration. The strike and expiration combination point to quick move higher in the price over the coming days.

BFT Technicals

Since BFT became public in October, there is little price history to draw from. The 52-week high of $17 is an area of resistance, but the strike selection and breakeven price of the call option looks for the price to close at a new 52-week high.

(Click on image to enlarge)

Taking a Fibonacci measurement of the retracement provides a near term target range of $18.36 to $19.16. That is the 138.2% and 161.8% projection levels of the pull-back. This target range seems appropriate given the near-term potential and the option activity.

Conclusion

With SPACs like BFT, the merged company is similar to how a stock trades post-IPO. Expect volatility and know that there is little to analyze. The option activity just provides an indication of significant activity and the near-term potential of the stock price. However, the story behind Paysafe is interesting.