This is Why I Keep A Close Eye On Options

Credit Suisse investment banker accused of insider trading. This is a fascinating story about how word of the TXU deal leaked out into the options market and influenced traders all the way to Pakistan (lovely this time of year). Indeed there was big buying of call options days ahead of the TXU announcement.

Things have been downright nutty on the takeover rumor front of late. I've heard speculation of dozens of deals in the last couple of weeks.

• Jeffries (JEF) has been a popular name and options volatility continues to creep higher on speculation Merrill or MassMutual will buy JEF for $43 a share. It's always interesting when a stock slips but the $7 out of the money JEF May 40 call still rise to an outrageous bid of .25.
• Sunoco (SUN) is rumored to have a $100/shr price tag. Everyone from ExxonMobil (XOM) to Total (TOT) has been mentioned as a suitor. Today SUN rallied hard off the lows of the day after a revenue miss as speculation swirls it will be taken out.
• There was a rumor Sprint (S) could be taken over by Comcast (CMCSA).
• Other takeover names: Newfield Exploration (NFX), Pogo Producing (PPP), Flamel (FLML), Bristol Meyers (BMY) and Monster (MNST).

Lot's of talk, but no action. The distinction with the TXU incident is that the speculative options volume hit on Friday and the following Monday TXU announcement was made. Many of the above rumors have been around for weeks. Perhaps they're all junk rumors now that we know the go to guy on hot tips is in federal custody? LOL.