M & A Law Prof Blog

Editor: Brian JM Quinn
Boston College Law School

Tuesday, March 15, 2011

Call options ... again

Buffet has jumped back into the M&A game, and it looks like the inside traders are right behind him.  You'd think that the SEC wasn't in the middle of a massive campaign against insider trading complete with criminal prosecutions.  Why?  Well, according to Bloomberg someone has been trading in call options just ahead of Berkshire Hathaway's recent acquisition announcement:

Trading of bullish Lubrizol Corp. (LZ) options surged to the highest level in a year on March 9, before Berkshire Hathaway Inc. (BRK/A)’s offer today to buy the world’s largest producer of lubricant additives lifted the shares 28 percent.

Call trading surged to 2,931 contracts on March 9, and open interest for the April $110 calls jumped to 2,654 from 41. A block of 2,168 April $110 calls traded for $2.35 each on March 9, data compiled by Bloomberg show. Lubrizol’s four-week average trading volume is 413. The April $110 calls advanced almost 11- fold to $24.70 today. The Wickliffe, Ohio-based company surged 28 percent to $134.68.

“That is more than suspicious,” said Ophir Gottlieb, head of client services at Livevol Inc., a San Francisco-based provider of options market analytics. “It looks like a naked purchase of calls, and that’s highly suspicious if not straight insiders trading.”




Insider Trading | Permalink

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