Friday, January 15, 2010

AAPL/ADBE Takeover Rumors

I couldn't resist... Anyway, it's Friday and it's slow on the floor...

The same old rumor about AAPL taking over ADBE popped up again today. Out of sheer boredom I looked for some unusual order flow... And what do you know, I found some.

ADBE is trading 35.88, AAPL is trading 207.53. The LIVEVOL™ Pro Summaries are below.

The day's largest trades from 1/7/2010 for ADBE are presented below. Simply put, someone sold a risk reversal 6500x and received $0.03. i.e Sold July 32 puts @ 1.43 and used that to fund a purchases of Jul 42 calls for 1.40. This is obvioulsy very bullish (unless it traded with stock). Click the image below to enlarge.

I'm not really familair with ADBE relative to its option trades. I took a look at the Options Tab for several months to see if 6500 open interest (OI) is common. Lo and behold - it isn't. In fact, there is not a single line with OI greater than 2,574 in Feb, Apr, July, Jan 11, Jan 12 (other than the strikes in question). The Options Tab snapshot for those months is inlcuded below (click the image to enlarge).

Just for fun - how does this trade look if ADBE is taken over for $50?
Gain = 6500*100*{$1.43 + ($8.00 - $1.40)}
= $5,219,500


This isn't trade advice just analysis. Read legal below.

Legal Stuff:

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