The options activity in Sun Micro (JAVA) suggests that some investors expect a higher takeover offer from Oracle (ORCL) or possibly another party (IBM?). Recall that Oracle has made a $9.50 per share offer for JAVA. The stock is up 7 cents to $9.22 and 28 cents below the takeover offer, which appears normal. What isn’t normal is the flurry of activity seen in June and July JAVA calls at the $10 strike. 60,000 contracts traded so far and about three-quarters trading ask-side of the bid-ask spread, suggesting buyers. ISEE data confirm that investors are buying to open JAVA calls.
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Frederic Ruffy is a well-known trader, writer, and strategist who has spent years educating investors and creating intelligent, insightful, unbiased market observations that are frequently cited by the Wall Street Journal and other financial publications. As senior analyst, Fred provides frequent and regular notes and daily updates for activity of interest.