Options Volume Spikes on Takeover Talk at UST, Clorox

Shares in UST Inc. (UST Quote - Cramer on UST - Stock Picks) (otherwise known as U.S. Tobacco), the parent company of Copenhagen and Skoal tobaccos, gave back some early-session gains to read 0.41% higher at $54.26 after the company withdrew its presentation at a Lehman Brothers Consumer Conference. The move gave rise earlier today to speculation that it might be entertaining a takeover bid. UST last moved on speculation earlier this year that Altria might be a suitor. Almost immediately today we saw an absolutely seismic 45% jump in implied volatility as options volume swelled to 91 times the normal level. As is typical of a stock moving on rumors of the "art of the deal" persuasion, this is heavily ensconced in call-buying at the September and October 60 lines, sending overall call volume to more than 8 times that of puts. A break of $60 would set a fresh 52-week high for UST shares -- current premiums suggest about a 21% shot at that level by the next expiration go-round on Sept. 19.

Elsewhere in takeover scuttlebutt, Clorox (CLX Quote - Cramer on CLX - Stock Picks) showed an early-session increase in options trading volume to more than 9 times the normal level. The impact of the bullish rumors is apparent from the 25-to-1 skew to calls and a 19% spike in implied volatility to 27%. With shares up 1.8% to $62.12, demand is clustered at the September 65 and October 65 call strikes.

Options in Cypress Semiconductor (CY Quote - Cramer on CY - Stock Picks) are trading on the elevated implied volatility that has been a hallmark of the chip space for the past two sessions. With shares down 1.4% at $28.59, we're showing implied volatility on all Cypress options at 46.6%, overshadowing the historic reading on the stock by some 15%. Some traders turned sellers of this pumped-up put premium, writing a large position in September 27 puts that totaled more than twice the open interest at 30 cents apiece, taking in that premium in a bet that Cypress shares will remain well above the $27 level through front-month expiration.

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