- 3 Safe Investments That Let You ‘Sleep Better:’ Strategist
- Beware of 'Trampling Effect' When Market Tops: Manager
- Gold Heading to $1150: Art Hogan
- More Upside if S&P Passes This Number: Market Pro
- Playing Activision and Other Video Game Stocks: Analyst
- Expect 'At Least' Another 10-15% Upside: Fund Manager
- Why are Options Bullish on This Smartphone Maker?
- Why are Traders Bullish on This Food Company?
- Profiting From Natural Gas: Strategists
- 3 Hot Mid-Cap Stock Picks: Portfolio Manager
MOST SHARED
- Herbalife Vs. Hedge Funds
- Apple Surpasses Nokia as Top Cellphone Maker by Profits
- Gold Heading to $1150: Art Hogan
- Adobe Cuts 680 Jobs, to Take Charge
- Toll Brothers: More Contracts Signed, but Sales Down
- Cramer Jeers J&J, Applauds Abbott
- US Becomes Top Country Brand Under Obama: Survey
- Starbucks Brews Up Growth
- Beware of 'Trampling Effect' When Market Tops: Manager
- Gold Heading to $1150: Art Hogan
- Starbucks Brews Up Growth
- Farr: An Extended Period—No Fat Lady in Sight
- More Upside if S&P Passes This Number: Market Pro
- Murdoch Lashes Out At Google
- Fighting The Flu Vaccine Critics
- Nov. 10: Unusual Volume Leaders
- Shadow Inventory Dwarfs Loan Mods
- Retail Earnings in Focus Ahead of Shopping Season
- Apple Surpasses Nokia as Top Handset Maker by Profit
- In This Relay-Race Market, Who Gets Baton Next?
- Workers Staying Put at Their Jobs as Jobless Surges
- Three Things the US Can Do To Stop the Dollar's Decline
- Toll Brothers: More Contracts Signed, but Sales Down
- Ponzi Proceeds: Bidding on Madoff's Toys
- Bear Stearn Fund Managers Not Guilty on All Counts
- Commodity ETFs: Returns May Not Match Expectations
RSS FEED
CNBC Stock Blog
Text Size 
A number of takeover rumors have been making the rounds, an encouraging sign that capitalistic optimism is returning to the markets.
Our hedge fund network estimates that M&A rumors were up some 80 percent in the last week alone. This is clear evidence for traders that those who had left the market are pouring back in.
Here is a sampling of stocks that saw unusual buying fueled by takeover speculation last week:
--Black & Decker [BDK
Loading...
()
]: A rumor that Danaher [DHR
Loading...
()
] could buy drove shares from $26.35 to $32.41
--MEMC Electronic Materials [WFR
Loading...
()
]: A rumor that BASF could buy drove shares from $15.26 to $19.26.
--Allergan [AGN
Loading...
()
]: A rumor that either Baxter [BAX
Loading...
()
] or GlaxoSmithKline [GSK
Loading...
()
] could buy drove shares from $39.53 to $50.89.
On Friday, someone tried to start a takeover rumor that retailer Lowes [LOW
Loading...
()
] might be interested in Whirlpool [WHR
Loading...
()
]. We looked at the option volumes and noted that, just two minutes before the rumor surfaced, someone bought 408 of the April 35 calls for $1.50. The stock spiked from $33.19 to $35.88 in just minutes, but then we noted the unusual selling of calls, which to us signaled a classic "pump and dump" move.
Here are some key questions that can help evaluate such actions:
--Is volatility expanding? Look to see if the options are becoming more expensive without being driven higher by shares of the underlying rising.
--Are more calls being bought on the offer than sold on the bid? When we see equal volumes sold on the bid as bought on the offer, then we do not have unusual activity.
--Is the subject of the takeover rumors relatively cheap compared with its peers and or recent valuation? Or has it already moved up and thus a less likely acquisition target?
___________________________
___________________________
CNBC INVESTOR EDUCATION
___________________________
Jon 'DRJ' Najarian is a professional investor, CNBC contributor, and cofounder of OptionMonster.com.
___________________________
Data is a real-time snapshot *Data is delayed at least 15 minutes