Questioning First Data's Call Buyers

"Global Payments (GPN - commentary - Cramer's Take) is guiding down, short some First Data (FDC - commentary - Cramer's Take)!" That should have happened. That would have been logical, they are both transaction companies. In fact, even after its guidedown, Global Payments delivered superior growth to First Data.

But what did people do on Friday? They certainly didn't buy puts on FDC. In fact, they bought ten times as many calls as puts, including a ton of out-of-the-money calls. The April and May 27.50 calls, the "money" calls, as I like to describe them because they are the ones that would really rally perfectly for minimal capital, were tallied in the thousands on Friday as were the May 30s. (I think someone made a judgment that it would look real bad the weekend before a bid to buy the near-term out of the monies.)

Now, I know the government looks at all call buying ahead of deals, particularly the large suspicious kind, or the kind that is one-off, where someone buys who has never bought before.

This time, though, given the bad news from Global Payments, I would, if I were investigating this trade, question everyone who bought more than a 100 lots. Memo to the government: Ask them why they did, and, in light of the GPN guidance, ask them why they didn't buy puts instead!

To watch a video on what Cramer makes of these dealings, click here.

At the time of publication, Cramer had no positions in stocks mentioned.

ALL JIM CRAMER BLOG ENTRIES | POST A COMMENT | READ COMMENTS  

---

Jim Cramer is a director and co-founder of TheStreet.com. He contributes daily market commentary for TheStreet.com's sites and serves as an adviser to the company's CEO. Outside contributing columnists for TheStreet.com and RealMoney.com, including Cramer, may, from time to time, write about stocks in which they have a position. In such cases, appropriate disclosure is made. To see his personal portfolio and find out what trades Cramer will make before he makes them, sign up for Action Alerts PLUS. Watch Cramer on "Mad Money" weeknights on CNBC. Click here to order Cramer's latest book, "Mad Money: Watch TV, Get Rich," click here to order his book, "Real Money: Sane Investing in an Insane World," click here to get his second book, "You Got Screwed!" and click here to order Cramer's autobiography, "Confessions of a Street Addict." While he cannot provide personalized investment advice or recommendations, he invites you to send comments on his column by clicking here.

TheStreet.com has a revenue-sharing relationship with Traders' Library under which it receives a portion of the revenue from Traders' Library purchases by customers directed there from TheStreet.com.