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Icahn tweet has traders betting on quick Nuance gains

A tweet from Carl Icahn regarding Apple sparked speculation around another Icahn holding, Nuance. And in a flurry of options trading that followed the tweet, traders appeared to wager that Icahn would suggest that Apple buy Nuance, which would likely send Nuance shares far higher.

On Wednesday afternoon, Icahn tweeted:


After the tweet, options activity on communications technology company Nuance spiked, with traders buying thousands of short-term bullish options contracts. On a day when more than five times Nuance's average daily options volume traded, the most active options strike was the October 15-strike call, which saw 7,126 contracts trade over the course of the day at an average price of 25 cents.

Nearly the entirety of that activity came after Icahn's tweet, with volume in the options contract peaking around 3:00 p.m. EDT. And as traders bought, the price of that option rose considerably, from 10 cents at 10:41 a.m. EDT to as high as triple that at 3:00.

These calls will only make money if Nuance shares close above $15.25 on Friday, Oct. 17.

"Basically, traders expect Nuance to be up sharply in the next week and a half," said Mike Khouw of Dash Financial, who added that the traders were likely responding to widespread Wall Street speculation that Icahn would push for an Apple acquisition of Nuance.

Read More Marc Andreessen: Icahn's like 'evil Captain Kirk'

Carl Icahn
David Grogan | CNBC
Carl Icahn

Icahn, who is by far the largest Nuance shareholder with a 19 percent stake, has previously said that an Apple acquisition of the company "is something I would never micromanage and never even think of telling [Apple CEO] Tim Cook," according to Reuters.

And there is an additional reason that Icahn may not press for an acquisition of Nuance. The communications technology company's shares have performed terribly of late, currently trading more than 25 percent below where they were in April 2013 when Icahn's position was revealed, and actually hitting a 2014 low on Wednesday before bouncing back on the Icahn-related speculation.

"If I had a large position in Nuance, I don't know that I would want to put it up for sale at a low-water mark—particularly if I believed in the fundamental value of the company," pointed out John Bright, an analyst who covers Nuance for Avondale Partners.

Yet Bright, who has a $25 price target on the stock, adds that an Apple acquisition of Nuance could make sense "strategically, as it may be important to block Samsung, Google or Microsoft from acquiring the asset."

Read MoreApple announces 'special event' for Oct. 16

Apple declined to offer comment on "rumors and speculation" around whether it may or may not acquire or be pressured into acquiring Nuance. Calls and emails to Nuance were not immediately returned.

Carl Icahn, his son Brett Icahn and fellow Icahn Enterprises portfolio manager David Schechter will discuss Apple and other holdings on Thursday at 12 p.m. EDT on CNBC's "Fast Money Halftime Report."

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