This Day On The Street
Continue to site
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here


TheStreet Premium Services

A complimentary preview
of Options-Profits Previews

Gotta love the late-Friday bursts of directional option volume! Leap Wireless (LEAP) shares have more than doubled in value this morning on reports AT&T (T) wants to buy the company and other suitors are expected. Shares finished Friday trading for $7.98, are now over $17 Monday morning after AT&T made an offer to buy the company for $15 per share, in cash. Meanwhile, options on the stock saw heavy trading late -- Friday and the unusual activity is stirring quite a buzz in the options world -- as it appears that some investors might have been tipped off that a deal was in the works.

Options volume on LEAP Friday was 5X the daily average. By way of comparison, typical options volume is about 1,350 contracts. Yet, on Friday, 6,800 calls and 350 puts traded on the stock. August 9, July 9 and October 8 calls were the most actives and there were no big trades. The largest trade was a 164-lot of Jul 9 calls for 9 cents per contract. Interestingly, roughly 80% of the volume in LEAP options Friday occurred in the final two hours of trading.

LEAP is trading above the takeover offer price of $15 per share, possibly on expectations another bidder might emerge. At that price, a July 9 call, which was trading for just 9 cents per contract Friday afternoon, has intrinsic value of $8 per contract Monday morning. Therefore, the 164-lot that was apparently bought for $1,510 late-Friday, is now worth $131,200. Experience suggests regulators will be scrutinizing the activity for signs of insider trading because it's fairly obvious that some investors were expecting the stock to LEAP before this week's expiration and buying out-of-the-money July call options on the stock late-Friday.

OptionsProfits can be followed on Twitter at

EXCLUSIVE OFFER: Jim Cramer's Protégé, Dave Peltier, only buys Stocks Under $10 that he thinks could potentially double. See what he's trading today with a 14-day FREE pass.

At the time of publication, Henry Schwartz held no positions in the stocks or issues mentioned.

Check Out Our Best Services for Investors

Action Alerts PLUS

Portfolio Manager Jim Cramer and Director of Research Jack Mohr reveal their investment tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
Quant Ratings

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
Stocks Under $10

David Peltier uncovers low dollar stocks with serious upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
14-Days Free
Only $9.95
14-Days Free
Dividend Stock Advisor

David Peltier identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Updates with exact steps to take - BUY, HOLD, SELL
Trifecta Stocks

Every recommendation goes through 3 layers of intense scrutiny—quantitative, fundamental and technical analysis—to maximize profit potential and minimize risk.

Product Features:
  • Model Portfolio
  • Intra Day Trade alerts
  • Access to Quant Ratings
Real Money

More than 30 investing pros with skin in the game give you actionable insight and investment ideas.

Product Features:
  • Access to Jim Cramer's daily blog
  • Intraday commentary and news
  • Real-time trading forums
Only $49.95
14-Days Free
14-Days Free
Top Rated Stocks Top Rated Funds Top Rated ETFs