A report came out yesterday that online payments giant PayPal Holdings Inc (NASDAQ:PYPL) is in talks to acquire social media company Pinterest Inc (NYSE:PINS) in what could be the biggest tech deal of 2021. Those familiar with the matter said PayPal has offered to acquire Pinterest at $45 billion, or $70 per share, which initially sent PINS surging, adding 12.8% during yesterday's session, marking its biggest daily jump in nearly a year. However, both securities are cooling today as some analysts question the tech merger.

Bernstein noted that it's struggling "to see compelling synergies and see meaningful execution risks to PinPay." Credit Suisse, meanwhile, said it's unclear on the rationale for the partnership. RBC Capital Markets had a different take, noting that PayPal's ambitions of becoming a "super app" could be realized with the help of a social media platform like Pinterest.

Nevertheless, Pinterest stock is set to cut its seven-day win streak short today, last seen down 2.6% at $61.01. Yesterday's rally was met with resistance at the 180-day moving average, which briefly served as support back in July. The equity is still down 7.3% year-to-date, thanks in part to a post-earnings bear gap the stock suffered in late July.

Meanwhile, PayPal stock is down 4.9% at $245.76, trading at its lowest level since May. The stock still sports a muted 5% year-to-date lead, but recently succumbed to pressure at the 140-day moving average, though the 320-day moving average still sits just below as a potentially supportive trendline.

Both stocks are seeing a surge in options activity in response to yesterday's news. So far Pinterest stock has had 105,000 calls and 36,000 puts exchanged, which is triple the intraday average. The most popular contract is the weekly 10/22 63-strike call, followed by the 62-strike call in the same series. Positions are being sold to open at both, suggesting these traders expect limited upside for the underlying security by the time these contracts expire tomorrow.

Over in PayPal's options pits, volume is running at seven times what's typically seen at this point, with 217,000 calls and 92,000 puts exchanged so far. The weekly 10/22 250-strike call is seeing the most action, followed by the 10/22 255-strike call in the same weekly series. Positions are being sold to open at both.