It looks like the Galleon arrests have not done much to deter insider trading.
As we pointed out earlier, the stock price shot up today.
But even more tellingly the options trading in advance of Hewlett-Packard $2.7 billion deal for 3Com looks very suspicious.
Zach Kouwe at DealBook reports:
Wall Street is buzzing about the enormous amount of volume in 3Com’s November and December call options, which give a buyer the right to acquire 3Com shares at $5 a share. Trading in 3Com call options surged on Wednesday to their highest level since Sept. 2007. Volume in 3Com’s November call options were 17 times the four-week average, according to Bloomberg News.
Shares in 3Com jumped more than 5 per cent on Wednesday as well, closing at $5.69.
Jon Najarian of OptionMonster.com has been all over this, calling the surge in call volume “VERY suspicious.” The pictures of the call option trading data which you can see were provided by Najarian. The November call options were traded for $.65 and are expected to rise to at least $2.90 tomorrow, delivering a 350 per cent return in one day, Najarian told Kouwe.
PEHub’s Dan Primack also suggests that something dirty went on today.
Moreover, someone with access to a Bloomberg terminal sent over some charts showing the price and volume for 3Com $5 strike calls. Take a look at the below, and pay specific attention to the the bottom right-hand corner.
See that thick white line that comes out of nowhere? Well, that’s today’s volume. Nearly 4,000, after several weeks below 100. But if HP didn’t announce the deal until market close…