Mosiac is topping the OptionsHouse hotlist in the first hour of trading. The stock is higher by 3.5% and over 70,000 contracts have already traded.
This company was the subject of a possible buyout attempt from Brazil Vale SA VALE that was abandoned last month after Brazilian government officials nuked the 25 billion dollar takeover plan.Today the early activity is being attributed to another takeover rumor – BHP for MOS.
It seems whenever a stock is higher on increased option volumes, news of a possible takeover will follow. Or, is the opposite more true? The hotlist is showing 30K of the September 60 calls trading early on the offer side of 40 and 45 cents, which seems to indicate the presence of a buyer on the bid side, albeit at a higher price (.55 cents), as the stock has rallied. It seems that when a stock is higher on increased option volumes, rumors often spread to suggest a possible takeover. As a word of caution, this may just be fast money day traders getting in and out as the rumor hit the tape.
My source is also showing me a seller of the Jan 60 calls at 3 dollars. This trade likely expresses a view that the rumor is just another rumor or if a buyout bid does appear it will be less than 60 dollars / share. The risk to the naked sale of a call is unlimited.The possible reward is keeping the premium paid.
Photo by Photo Mojo
No related posts.
