Options Action: Palm

Share of Palm traded higher on Tuesday with options volume absolutely exploding in the name.

Some of the gains came from a belief that Palm's recently announced secondary offering would price on Tuesday, says Avian Securities analyst Matthew Thornton.

Others speculated the move could have been triggered by CNBC’s very own Jim Cramer who suggested that the market had over-reacted to Palm's quarterly report and guidance issued late last week.

But more likely than not the biggest moves were generated by published reports which suggest that Nokia may be in conversations to buy the company.

According to Bloomberg, Nokia, the world’s biggest mobile-phone maker, has fallen behind rivals in software for smart phones and buying Palm would help close the gap.

Analysts at Pacific Crest say “Palm is worth $17 a share on its own, and $25 to $30 to Nokia, based on what they are spending to replicate Palm.”

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