It’s been a hectic December for unusual options trades, and Friday December 9th was no different, especially the call options. One of the most interesting ones this YEAR was unusually large and frequent call buys in InvenSense Inc (INVN).
As is usual, one trader seems to know more than the average joe about the inside happenings in InvenSense Inc (INVN). The man with the plan swept up a boatload of December call options while INVN stock was languishing in the $8.30 range. First there was a $13,000 bet in the 12/9 $8.50 calls. Next came a $25,000 bet in the Dec16 $8.50 calls. But wait, there’s more, much much more.
Then there was a $46,000 bet in the same DEC16 $8.5 calls, followed by a $21,000 bet in weekly 12/23 $8.5 calls, and then another $46,000 bet in the weekly 12/9 $8.50 calls.
All in all, this rascally illegal inside trader gobbled up around $151,000 in INVN call options, many of which expired that same day! Talk about conviction (of course the SEC should, but won’t be, convicting this gentleman for blatantly obvious insider trading, will they?)
Of course it gets better. Not long after all this “investment” in InvenSense Inc. (INVN) occurred, trading in INVN was halted pending news. And of course the insider made a very large, very quick profit, as it was announced that Tokyo based TDK Corp had made an offer to buy InvenSense Inc (INVN) for $12 per share.
So, it didn’t take long for this trader to make over $500,000 in one short morning of trading. It pays to have insider knowledge of mergers and acquisitions.
It is interesting that InvenSense Inc (INVN) stock price barely went over the $11 mark Friday, and closed at just $10.55, given the the $12 buyout price. Seems traders are not 100% convinced that the deal to buy InvenSense Inc (INVN) will go through at the $12 offer price?
So next time you meet someone who says they do “Mergers and Acquisitions”, make sure you befriend them very quickly, so you too can profit on the magic of insider options trading.