Continuing our effort in detecting unusual activity in the market place, this week we highlight an interesting option activity in KLAC. On October 19, 2015, we detected activity in the NOV 55 Calls in KLAC with over 1300 contracts traded at $1.35. Though initially not a large transaction at the surface, unusual options tend to paint a unique perspective of possible future activity. The value of the transaction was approximately $175K (commissions not included). The option activity was rather isolated with respect to other chatter or unique analyst activity. On October 21, 2015, market participants learned of an acquisition of KLA-Tencor by Lam Research Corporation. The effective acquisition stock price was $67.02 of KLAC. The announcement of the acquisition was timed as KLAC released their earnings report and beating EPS estimates.
Readers of our article last week read about PMCS and SNDK options, chatter, and analyst activity. This week SNDK continued with option activity on October 19; Activity in the NOV 77.5 CALLS. On October 21, once again, traders and investors saw an acquisition announced involving SNDK and WDC. Western Digital announced that it will acquire SanDisk at a value of $86.50.
Though not always indicative of possible merger and acquisitions, options do provide a rather valuable indication of larger bets and positions being established by both institutional and professional traders and investors. We encourage our readers to pay closer attention to equity derivative activity as earnings season continues.
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