$CTRX, is not exactly a chick magnet in the option world. The options are fairly illiquid, and for much of the trading session on Friday last week, the options did not see any action. But as the market came to a close, option activity heated up in a big way. It was as if this nerdy stock took off its thick rimmed glasses, undid its hair, and started twerking.
Before the bell today, Monday, $CTRX was bought out by United Healthy for $61.50 a share. A 25% premium to the closing price of the stock. For a stock that has traded in a few dollar range for years, a 25% move is something the options market was not pricing in. Which makes the unusual option action right at the close on Friday all the more suspicious.
The 'lucky buyer' of assorted strikes of $CTRX stock options, just prior to the closing bell on Friday, is now sitting on massive profits. One trade on Friday was for 2,000 contracts of the $50 April calls for $.50 for a $100,000 value. At the open this morning those calls were worth $2 Million! That's a tidy $1.9 million potential profit. Not bad for a few minutes of front running a giant buyout.
So let me get this straight. In the last hour of trade on Friday, on the trading session before a stock was getting bought out for a 25% premium, options were flying off the shelves on previously dormant strikes? This certainly qualifies as unusual. Especially when you consider the money involved for these out of the money strikes.
I'd rather be 'lucky' than good... or for this buyer privy to inside information. Then again I am just speculating.
Perhaps someone legitimately decided to go in big during the last hour of the week for no other reason than he could. Yep.