Nanex Research

Nanex ~ 16-Jul-2013 ~ Leap Wireless Option Trades Before Buyout

After the close of trading on July 12, 2013, AT&T announced it would buy Leap Wireless International (symbol LEAP) for $1.19 billion, a premium of about 88% over the July 12 closing stock price of $7.98. Looking at trading in option for LEAP that week found unusual call buying activity. This activity was the subject of the Wall Street Journal article Bullish Leap Options Set to Gain $4.6 Million by Kaitlyn Kiernan.

1. Daily Leap Wireless call/put volume (left) and call/put trades (right) for each day preceding the announcement.

2. (Zooming out of charts above) Daily Leap Wireless call/put volume (left) and call/put trades (right) from January 2, 2013 through July 12, 2013.
Note that July 12 had the highest number of Call trades and volume since at least January 2, 2013. Also, July 10 and 11 had well above average Call activity, but normal or even subdued Put activity.

3. Total Leap Wireless Call/Put volume by contract for the 5 days preceding the announcement.

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