Investors have pushed Tyco International shares up 15% over the past week amid reports that the company is in talks to be bought by French electrical engineering company Schneider Electric — chatter that Scheider has tried — in vain — to quash.
Schneider issued a statement Wednesday that it's not currently in takeover talks with Swiss-based Tyco after its shares fell nearly 10% on the reports, but the options market begs to differ.
"Options are definitely pricing a deal is as good as done," said Dennis Davitt, First New York Head of Equity Derivative Trading.
This apparent confidence that the deal will close comes despite reports citing people close to the situation that the leaked early talks could actually make a Tyco-Schneider Electric deal less likely.
While any transaction remains up in the air, one thing is clear: with all these mixed messages, investors who want to play Tyco for any deal are doing so through the options market.
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