In the age of the $100 bln deal (the level of the latest bid for ABN) it seems anything is possible. Today was one of the bigger days for merger speculation in quite a while. Is it a sign of a market top, or are things going to heat up on the M&A front ahead of a top?
In the world of options trading, the speculation was rampant today.
In no particular order:
- There's been the ongoing heavy options activity in Bristol Meyers (BMY). May options trading was heavy and biased to the call side ahead of earnings Thuesday, but the eye catching activity for the sake of merger speculation was the 11,400 contracts trading in the June35 calls vs open interest of 3575.
- American Airlines was the subject of rumors concerning a potential bid coming from a group including British Airways (BAB) and Goldman Sachs (GS), among others. Nearly 30,000 May30 calls traded and more than 10k May35 calls also traded. June call options activity was also heavy in AMR.
- This blog noted heavy options trading earlier this week in Sovereign (SOV), International Game (IGT) and Xerox (XRX).
- Options trading was heavier than usual today in Louisiana Pacific (LPX), St. Joe Paper (JOE), Joy Global (JOYG), Eastman Kodak (EK) and Accredited Home (LEND) -- all attributed to merger 'chatter'.
Just where do these rumors come from? If only we knew - and if only we knew which one of the above will pan out into some real, money making news. Of course, the above summary is for informational purposes and is not a recommendation or even a suggestion that you should jump into any of them - since this stuff is RUMOR. None of it may pan out to anything but significant losses for the options players who chased after this stuff today.
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