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Halftime—Jon Najarian: Bill Ackman Rumor Driving Options In This Name

Word that renown hedge fund manager Bill Ackman may take a stake in Best Buy is driving unusual options activity in the electronics retailer, reports options trader Jon Najarian on Tuesday.

The rumor is that Ackman's Pershing Square Capital Management is looking at taking share in the Richfield, Minn.-based company , said Najarian, co-founder of optionMONSTER.com. It isn't the first time this rumor has circulated either. Najarian noted that on Jan. 5, it was said Ackman was interested in taking a stake in BBY. Almost immediately, the stock popped $2 a share.

With the stock currently below Jan. 5 levels, options traders are buying the Feb. 16 and Feb. 34 calls. Najarian himself jumped into this trade on Tuesday by buying calls and the stock, as well. If there isn't any news from Ackman, though, Najarian said he'll quickly get out of this trade.

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POPS & DROPS

Stocks added to strong gains on Tuesday, led by materials and banks, as the market easily erased losses from Friday's sharp sell-off in the wake of turmoil in Egypt and investors focused on upbeat earnings and economic news. The "Fast Money" traders, though, thought these market movers to be the most interesting:

Pops (stocks that went higher)

Pfizer (PFE) popped 6%: The drug company reported its fourth-quarter profit had more than tripled and said it is shifting from its previous strategy of pursuing acquisitions to buybacks. Steve Cortes, founder of Veracruz, said he "loves this name." He likes the stock's 4.4 percent dividend yield and hopes it pulls back, so he can buy shares.

Archer Daniels Midland (ADM) popped 6%: The farm products company reported its net profit rose to $732 million from $567 million the year prior. Earnings growth came from its corn-processing and ag-services businesses, the Decatur, Ill.-based company said. From floods to political unrest, Joe Terranova of Virtus Investment Partners said there are a number of current events creating increased demand for food. He likes the story and is a buyer of this name.

Covidien (COV) popped 3.5%: The health care company said its first-quarter net profit rose by 3.6 percent. The Dublin, Ireland-based company said it benefited from a lower effective tax rate of 16.1 percent. Should this stock hold above $49 a share, Brian Kelly of Kanundrum Capital said he would stick with it.

Drops (stocks that went lower)

Orexigen Therapeutics (OREX) dropped 72%: Shares of this drug manufacturer plummeted after U.S. regulators told the company to perform more studies on its weight-loss pill.

"Everybody wants to get fat on these obsesity drugs and unfortunately, the FDA is having none of it," Najarian said. "Every time they reject them, these stocks lose about 70 percent of their value."

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STREET FIGHT: AMAZON OR NETFLIX?

With shares of both Amazon.com and Netflix trading near highs, which is the better play?

David Miller, an analyst at Caris & Co., would go with Amazon . Miller said he doesn't cover Netflix , but still thinks it's a better play. He said Amazon's streaming content business has a long way to go before it's able to compete with Netflix. Amazon currently has roughly 5,000 television and movie titles to choose from, but Miller thinks consumers will want more. The question is, said Miller, is whether Amazon will be willing to pay for exclusive content in the way Netflix has.

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CALL THE CLOSE

At the conclusion of Tuesday's program, the "Fast Money" traders stated where they think the market could go and how they plan to trade it.

Cortes would buy shares of Morgan Stanley above $30 a share.

"DRJ" said he loves that the S&P 500 broke through the 1,300 level. If it holds, he's a buyer of the market.

Kelly recommends buying agriculture and oil names.

Terranova said that as long as the U.S. dollar is weak, he'll stay with the rally.

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Trader disclosure: On Feb. 1, 2011, the following stocks and commodities mentioned or intended to be mentioned on CNBC’s "Fast Money" were owned by the "Fast Money" traders; Terranova Owns (VRTS); Terranova Owns (C); Terranova Owns (UPL); Terranova Owns (GM); Terranova Owns (PEP); Terranova Owns (MS); Terranova Owns (POT); Terranova Owns (LTD); Terranova Owns (SU); Terranova Owns (CVI); Terranova Owns (CVE); Terranova Owns (CPX); Terranova Owns (CNQ); Cortes is short (LVS); Cortes is short (BAC); Cortes owns (TSN); Cortes owns (EXC); Cortes owns (MO); Cortes owns (PM); Cortes owns (GS); Cortes owns (MS); Cortes is short Gold; Cortes is long U.S. Treasuries; Jon Najarian owns (FRO), is short (FRO) calls; Jon Najarian owns (GM), is short (GM) calls; Jon Najarian owns (V), is short (V) calls; Jon Najarian owns (BIDU), is short (BIDU) calls; Jon Najarian owns (HPQ), is short (HPQ) calls; Jon Najarian owns (WMT), is short (WMT) calls; Jon Najarian owns (ANR), is short (ANR) calls; Jon Najarian owns (BBY) calls; Jon Najarian owns (AKAM) calls; Jon Najarian owns (MON) calls; Jon Najarian owns (RVBD) puts

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For Joe Terranova:
Terranova is Chief Market Strategist of Virtus Investment Partners, LTD
Virtus Investment Partners Owns More Than 1% Of (ABAX)
Virtus Investment Partners Owns More Than 1% Of (AMKR)
Virtus Investment Partners Owns More Than 1% Of (CCG)
Virtus Investment Partners Owns More Than 1% Of (CASS)
Virtus Investment Partners Owns More Than 1% Of (CSVI)
Virtus Investment Partners Owns More Than 1% Of (EXR)
Virtus Investment Partners Owns More Than 1% Of (FCFS)
Virtus Investment Partners Owns More Than 1% Of (IGE)
Virtus Investment Partners Owns More Than 1% Of (KRC)
Virtus Investment Partners Owns More Than 1% Of (LDR)
Virtus Investment Partners Owns More Than 1% Of (LPHI)
Virtus Investment Partners Owns More Than 1% Of (NCRI)
Virtus Investment Partners Owns More Than 1% Of (DBV)
Virtus Investment Partners Owns More Than 1% Of (XLB)
Virtus Investment Partners Owns More Than 1% Of (XLV)
Virtus Investment Partners Owns More Than 1% Of (XLP)
Virtus Investment Partners Owns More Than 1% Of (XLY)
Virtus Investment Partners Owns More Than 1% Of (XLE)
Virtus Investment Partners Owns More Than 1% Of (XLI)
Virtus Investment Partners Owns More Than 1% Of (XLK)
Virtus Investment Partners Owns More Than 1% Of (XLU)
Virtus Investment Partners Owns More Than 1% Of (SUBK)
Virtus Investment Partners Owns More Than 1% Of (WDFC)
Virtus Investment Partners Owns More Than 1% Of (YDNT)
Virtus Investment Partners Owns More Than 1% Of (CLB)

For Brian Kelly
Accounts Managed by Kanundrum Capital Own (DBA)
Accounts Managed by Kanundrum Capital Own (MON)
Accounts Managed by Kanundrum Capital Own (JJG)
Accounts Managed by Kanundrum Capital Own (SLV)
Accounts Managed by Kanundrum Capital Own (GLD)
Accounts Managed by Kanundrum Capital Own (BAC)
Accounts Managed by Kanundrum Capital Own (TLT)
Accounts Managed by Kanundrum Capital Are Short The Yen
Accounts Managed by Kanundrum Capital Are Short The Australian Dollar

For Rachel Ziemba
Ziemba has no disclosures

For Fadel Gheit
Gheit owns (BP)
Oppenheimer & Co expects/intends to receive compensation for investment
banking services in the next three months from (VLO)

For David Miller
Miller has no disclosures in (NFLX)

CNBC.com with wires.

Symbol
Price
 
Change
%Change
AMZN
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BBBY
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MS
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NFLX
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