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 twitter.com/OptionsProfits