City Office REIT Skyrockets 23.92%—Is the $7.00 Merger Premium the Final Chapter?

Summary
• City Office REIT (CIO) surges 23.92% intraday, trading at $6.89 as of 16:46 ET
• Merger agreement announced at $7.00/share, a 26% premium to prior close of $5.56
• Intraday range narrows to $6.88–$6.93, with 9.26M shares traded at 23.98% turnover rate

The stock’s explosive move hinges on a definitive $1.1 billion merger with MCME Carell, offering $7.00 per share in cash. With the price breaching the 52-week high of $6.93 and the Phoenix portfolio sale pending, investors face a pivotal decision: lock in gains or bet on the deal’s execution. The path to a $7.00 finish remains clouded by regulatory hurdles and shareholder approval.

Merger Agreement Catalyzes Record Surge in City Office REIT Shares
City Office REIT’s 23.92% intraday rally stems from the announced $7.00/share merger with MCME Carell, a joint venture between Elliott Investment Management and Morning Calm Management. The $7.00 offer—26% above the prior close and 39% above the 90-day volume-weighted average—immediately priced the stock near the cash settlement. The transaction, valued at $1.1 billion including debt assumption and preferred stock redemption, was unanimously approved by the board and requires shareholder ratification. While the Phoenix portfolio sale and regulatory approvals remain prerequisites, the cash offer has eliminated future operational uncertainty, triggering a one-way bid to the $7.00 price floor.

Office REIT Sector Mixed as BXP Drags, CIO Soars on Merger
The Equity REITs - Office sector remains fragmented, with Boston Properties (BXP) declining 0.48% as office demand struggles. CIO’s 23.92% move starkly contrasts with the sector’s cautious tone, highlighting the merger’s role as a liquidity lifeline in a challenging environment. While the deal’s $7.00 cash offer exceeds CIO’s 52-week high, broader office REITs remain in a bearish technical phase, underscoring the idiosyncratic nature of CIO’s rally.

Options Playbook: CIO20250815C7.5 and CIO20250815P7.5 Lead the Charge
• RSI: 52.46 (neutral) • MACD: 0.062 (bullish divergence) • 200D MA: $5.24 (below price) • Bollinger Bands: $5.29–$5.79 (price at upper band) • Key Resistance: $7.00 (merger price) • Key Support: $5.36 (30D support)

Given the merger’s $7.00 cash offer, short-term options with expiration on 2025-08-15 provide optimal leverage. The CIO20250815C7.5 call (strike $7.50) and CIO20250815P7.5 put (strike $7.50) stand out:

• CIO20250815C7.5: Delta 0.165 (moderate directional bias), IV 34.26% (elevated but reasonable), Gamma 0.419 (high sensitivity), Theta -0.0018 (moderate time decay), Turnover 1,943 (liquid).
• CIO20250815P7.5: Delta -0.791 (high intrinsic value), IV 39.85% (attractive volatility), Gamma 0.412 (volatility responsiveness), Theta -0.0089 (rapid time decay), Turnover 1,400 (liquid).

Payoff Analysis: A 5% upside to $7.24 (from $6.89) would yield $0.24 profit for the CIO20250815C7.5 (strike $7.50), while a $7.00 merger settlement would make the put option’s intrinsic value $0.00. The call offers 3.5x leverage (strike price vs. current price), making it ideal for capitalizing on a near-term $7.00 close. Aggressive bulls should prioritize the CIO20250815C7.5 into a $7.00 breakout, while the put provides downside protection if regulatory delays trigger a pullback.

Backtest City Office Reit Stock Performance
The CIO experienced a 24% intraday surge on July 24, 2025, which was followed by a brief period of volatility. The backtest reveals a mixed short-to-medium-term performance, with the 3-day win rate at 49.82%, the 10-day win rate at 49.09%, and the 30-day win rate at 49.28%. The maximum return during the backtest period was 0.39%, which occurred on day 55, indicating that while there was some positive movement, it was relatively modest compared to the initial surge.

Merger Execution Looms: Lock in Gains or Ride the Wave?
The $7.00 merger price has already priced in much of CIO’s near-term upside, but execution risks—Phoenix portfolio sales, shareholder approval, and regulatory hurdles—remain. Technicals suggest a test of $7.00 in the short term, with the 200D MA at $5.24 acting as a critical support. Meanwhile, sector leader Boston Properties (BXP) declines 0.48%, underscoring broader office REIT fragility. Investors should monitor the 2025-08-15 options chain for liquidity shifts and consider the CIO20250815C7.5 as a high-conviction play. If $7.00 holds, the merger’s execution becomes a certainty—act now to secure your position.