There had been no rumors circulating about such a deal, nor was there even a strategic Sunday night media leak. Moreover, the company's share price actually fell last Friday by a few dollars per share closing But it does appear that someone might have known what was coming.
Fortune has examined options contract records for LinkedIn, and discovered unusually high trading volume last Friday.3. Trading Put Options
They first began trading on Feb. Well, until last Friday when a whopping contracts were traded.
XLK Puts and a Put Spread TradeThe Options Insider
That also represents an all-time high, although there also was an unusually-strong action the day before contracts traded and on May 11 traded. It is, of course, possible that last Friday's buyer or buyers?
Definition of 'Insider Trading' - The Economic Times
That's some very well timed trades. A more likely scenario, of course, is that someone in the market had an inkling of what was coming. If this is indeed a case of insider trading, it would hardly be the first time that options trading was the first giveaway. Back in , for example, unusual options trading preceded Hewlett-Packard's purchase of 3Com, ultimately leading to insider trading charges against a hedge fund manager.
An options trader who viewed the data compiled by Fortune said that it likely is too small for an institutional buyer, suggesting an individual trader is more likely. What's more, by mid-after a number of traders who normally flag questionable options trades were saying that these trades may have been less nefarious than they looked at first.
It appears at the same time the LinkedIn call options were bought, put options were bought as well. It's not definite they were bought by the same trader, but if there were it could have been part of a hedging strategy, and the losses from the puts could offset what the person stood to make on the so-called out-of-the-money call trade, suggesting who ever made the trade didn't really know a deal was happening.
However, even if the put was meant to hedge the call option, it appears whoever put on these trades stood to make more money if LinkedIn's shares took off, perhaps because of an acquisition, which is what happened.
On top of that, the trades from last Friday were not the only questionable action in LinkedIn's shares. And unlike the other trade there does not seem to be an offsetting put purchase. Jack Ma Jack Ma: A 4-Day Work Week Is Coming Soon.
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