Alcoa Call Option Activity Raises The Flags (AA)

Posted in Options 
August 14th, 2008

We have seen some very unusual options trading in the options for ALCOA INC. (NYSE: AA) today.  In fact, these are the sort of trades that make traders yell out “buyout speculation” or that start rumors.  We do not know if that is the case or not, but this is the sort of trading that should get pretty large notice later in the day if anything more materializes.

ALCOA trades at $32.40 and we have seen more than 30,000 contracts of the OCT08 $45.00 CALLS trading hands.  The open interest was high already with more than 47,000 contracts listed as open but there is almost as large of an open interest in the $42.50 and $40.00 strikes for the same month.

As a reminder, this stock has been speculated on before and it has been the subject of merger rumors as well.  30,00 contracts is representative of 3,000,000 shares on a fully leveraged basis.  This stock has only traded about 4.7 million shares today and the normal volume is 14.5 million shares per day.

Its 52-week trading range is $26.69 to $44.77.  If a deal is coming or if anything is brewing, then it would be a big one considering the current investment and merger climate during a credit crunch.  Its market cap is about $26.3 Billion as of today.

12:07 PM EST

STORY UPDATED AT 12:15 PM EST… WE ARE BEING TOLD THIS IS A CALL SPREAD TRANSACTION, BUT WE HAVEN’T SEEN ALL OF THE CONTRACT TRADES PRINTED AS OF YET……… WHETHER OR NOT THAT IS THE CASE MIGHT NOT BE KNOW FOR SOME TIME.  REGARDLESS OF THIS, THIS IS HIGHLY UNUSUAL OPTIONS ACTIVITY……….. -JO

JON OGG

AUGUST 14, 2008

Leave a Reply

You must be logged in to post a comment.

-->