Analysts Debate Whether Trading In CC Options Was 'Unusual' Before LBO Story Aired
October 27, 2006 at 4:15 PM (PT)
An options-trading website is charging that options trading in CLEAR CHANNEL COMMUNICATIONS appeared to show an unusual run-up in volume in the few days before CNBC's TUESDAY report that the company was considering an LBO to go private.
REUTERS reports that OPTIONMONSTER.COM's JON NAJARIAN alleges that the site's analysis model "suggests somebody knew something on MONDAY," before the CNBC report aired. Unnamed "market watchers" are cited by REUTERS as being "skeptical" and saying that "the unusual trading patterns in CLEAR CHANNEL provide no clear evidence that someone was acting on inside information.... The options could have been moving in advance of earnings, as well as on rumors of a takeover, and it's possible that traders just got lucky by speculating."
THEFLYONTHEWALL.COM analyst PAUL FOSTER told the wire service that CLEAR CHANNEL's volatility was only slightly higher before the CNBC story than normal, adding, "There was no foreshadowing of this deal in the options."
SEPTEMBER's normal daily call volume of CLEAR CHANNEL options was 2,873, but NAJARIAN noted that on MONDAY the volume was 6,121, with heaviest volume in the NOVEMBER 30 calls.
Meanwhile, the WALL STREET JOURNAL reports that the bids for partnering with the company on the LBO are due DECEMBER 10.