Life On The Inside


Wall Street appears to be living in an 80's time-warp. Back are the corporate raiders, the heavy deal-making, and if suspicious stock movement is any indication: insider trading.

Look no further than today. Apartment developer Archstone-Smith (ASN) bought out for $13.5 billion. This after the stock jumped 8% on Friday. It's enough to make even Gordon Gekko blush!

The first whispers of a deal are often first heard in the options market. According to Bloomberg News, options volume on stocks involved in big takeovers this year jumped more than 200%, on average, before the announcement.

Pete Najarian is Fast Money’s resident expert in options trading. He says that he looks for options trades where investors are buying the stock and the put in anticipation of some positive news. He adds he saw this kind of trading recently in CDW Corp. (CDWC).

Dylan Ratigan explains that options trading is really expressing a point of view – believing the stock is either going up or down on impending news.

Pete Najarian talks about Cleveland-Cliffs (CLF). Investors bought 5400 June 80 calls on Friday. That says to Pete there’s speculation that "something is about to happen with CLF."

Jeff Macke adds the M&A frenzy is starting to take hold. He explains options on Guitar Center (GTRC) traded heavily on Tuesday on speculation the company was a takeover candidate. Jeff thinks this stock will probably move higher.

The guys talk about whether investors are “really” trading on insider information. Some of the guys suggest it’s more ahead of news trading than anything else.

Pete Najarian adds investors should not trade options unless they understand the trade, completely. Otherwise, they’re apt to get hurt, he says.

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Trader disclosure: On May 24, 2007, the following stocks and commodities mentioned or intended to be mentioned on CNBC’s Fast Money were owned by the Fast Money traders:
Najarian Owns (CLF), (EMC), (INSP), (KR); Bolling Owns (ICE),(NMX), Gold, Silver
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