UPDATE: Options Action w/ Pete & Jon Najarian
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Both Pete and Jon Najarian are seeing some unusual options action. What do they make of it?
Options traders are buying April 65-calls in Allergan, explains Pete Najarian. That suggests the stock could still have more upside.
Why are investors keen on Allergan?
On CNBC’s Closing Bell OptionMonster Jon Najarian explained the spike was due to speculation the Botox maker may be acquired by GlaxoSmith Kline
According to Bloomberg, “Allergan call options surged in the first 90 minutes of trading to a record 45,089, or 15 times the four-week average. Calls give the right to buy a security for a certain amount, the strike price, by a given date.”
Glaxo had no comment.
Althouugh it’s widely believed that GSK is the most likely suitor Jon Najarian adds that Baxter, a lesser known health care company, may also be a potential bidder.
And in addition, Najarian has his eye on Seagate. He suggests options activity could signal deal making chatter. And he says, if the firm is an M&A target the “takeout price should be north of $13 double of where the stock is trading right now.”
What does Najarian make of all the options action?
"Investors are coming out of their caves and risk takers are getting back in the game," he says.
Check out Dylan's interview with Jon Najarian on the Fast Money Final Call.
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Trader disclosure: On Mar. 24th, 2009, the following stocks and commodities mentioned or intended to be mentioned on CNBC’s Fast Money were owned by the Fast Money traders; Adami Owns (AGU), (C), (GS), (INTC), (MSFT), (NUE), (BTU); Seymour Owns (MT), (BAC), (EEM), (FXI), (TTM), (BX); Finerman's Firm Owns (MSFT), (PBR), (RIG); Finerman's Firm Is Short (BBT), (WFC); Finerman's Firm Owns (DNA) Call Spread; Finerman's Firm Owns (WFC) Preferred; Najarian Owns (C) Call Spread; Najarian Owns (AGN) Call Spread; Najarian Owns (AAPL) Call Spread; Najarian Owns (BX) Call Spread; Najarian Owns (GS) Call Spread; Najarian Owns (GD) Call Spread; Najarian Owns (MS) Call Spread; Najarian Owns (POT) Call Spread; Najarian Owns (PALM) Stock & (PALM) Calls; Najarian Owns (TGT) Call Spread; Najarian Owns (XHB) Call Spread; Najarian Owns (SWY) Calls; Najarian Owns (MSFT) ; Najarian Owns (FIG)
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