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Oncology Co. Options Surge on Takeover Talk

Shares of Varian Medical Systems are moving higher along with strong options activity amid takeover rumors.

VAR stock is up some 5.7 percent to $33.19 in midday trading with heavy call volume. Average turnover for Varian calls is an anemic 500 for a full session, but today more than 8,300 of the contracts changed hands in the first half hour of trading alone, according to OptionMonster's real-time tracking systems.

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German technology conglomerate Siemens is rumored to be the possible suitor because it has the cash and a plausible reason for such a merger, needing exposure in the cancer therapy market.

Siemens is said to be working on a new oncology platform, and Varian could be a good fit as it trades at just half its 52-week high of $65.84.

Two independent sources say Siemens' offer could be in the neighborhood of $45 per share.

Disclosures:

I own VAR stock and options.

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More Diagnostic Equipment Makers:

Hologic

General Electric

Dentsply International

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Jon 'DRJ' Najarian is a professional investor, CNBC contributor, and cofounder of OptionMonster.com.

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