The Alcoa Buyout Rumors (AA)

Posted in General, Options 
May 3rd, 2011

Alcoa, Inc. (NYSE: AA) is up today on buyout rumors, but there are some concerns that these may be overblown. Rio Tinto is the supposed bidder here… Shares have already doubled normal trading volume and then some with over 52 million shares traded as of 1:10 PM EST versus an average volume of about 25 million shares.  The gain is by 2.85% at $17.71. 

Some commentary came from CNBC that the rumors are first off called unbelievable and second that rumors of a third party financing have been refuted.  We would also throw in that the consensus analyst price target is $20.26 from Thomson Reuters.

Where we cannot refute a development is in the stock options trading. The May 2011 expiration date is MAY 20, 2011 and we have seen the following trading in Calls alone against the open interest:
CALL$ Vol.  OpInt
16.00 1,155 13,620
17.00 9,037 31,968
18.00 48,745 46,024
19.00 26,660 10,802
20.00 46,826 12,514
21.00 5,927 809
22.00 8,950 329

Just keep in mind taht Alcoa was a $30 an

1:10 PM EST

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