![](https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEiOLgl89BvKjWL30ISRHrtnhlfw1Gy4rmJNyu-CLI6VOwXlev-8wgh9YF2Yh4GhO6I90whoGar7ktUiFi49NmUz4SP0PCiBXc4G5fUrtRMd_hVjrJVYW_g3KJgR9Ygb1-Y9xmPTR0KKcnE/s400/rdwr_summary_9-23.gif)
I first mentioned this stock on 9-14-2010. You can read the post here:
Radware (RDWR) - Stock Explodes Mid-day on Rumors; Someone Knew...
It turns out an Israeli newspaper posted a rumor of $43 takeover price, the it took about half an hour to get translated into English. So no foul play, best I can tell on that day.
But...
I have some trade analysis in this post, but just to stoke the flame of a possible cheater, check this out. On 8-19-2010 (nearly a month before the "rumor" announcement), someone tried to purchase thousands of the Mar 35 calls for $0.55 against an NBBO of $0.10 x $0.50. This is against a stock price of ~$23.00 and at the time, a 52 wk high of ~$24. I have included the trades from that day. The call buyer was only filled on ~1,500 calls (click to enlarge). Note volume traded in one trade was larger than the entire daily average at the time.
![](https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEhphppYNDN0U34_qkryULaIQsR7hCw7vB36vQ_ePYGIDm5lBmQFvQbgrdSMx_LCsvZqZ10eqX9tV0jopU_WGE0-z1r4x-OhTZm6-BXbPB50Wi6qn5zAac_azaSfDMsJ5yDxzjofq6Tgbmk/s400/rdwr_ts.gif)
You can see the jump in OI in those calls (click to enlarge).
![](https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEg1vur6BgzSdFizSuTQ5nToALk_kRgO5O5N-kbFLJM93-JcpnSZsZcYZlIdujMGCrFJD-wAUQvf39CAuQQbp-CjYpPTt4MjclfwKrRIJPnXgxOpzv28-jsVy5wteQUcy775PsksdJqi-Xk/s400/rdwr_level2.gif)
As of today, those calls are worth ~$5.00, the OI is 1,750, so there you go. That's 10x the money in one month. Bottom line, I do feel like this was a cheater, but it's just one opinion of many.
On to the reality of today... The stock hasn't had any confirming news, and now there may be a trading opportunity, albeit risky.
First, let's look to the Charts Tab. The top portion is the stock price, the bottom is the vol (IV30™ - red vs HV20™ - blue vs HV180™ - pink).
![](https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEgIlD8d1mSAIAvmIgrfVT7bB6sUQga2mBmClJnkMBDolzqk4t6LdWvkPA5Ab4GeTI2ik16LGQxjYBPBCox3TR5dMCAHYTFZL21WcsIiEcd_bWN0iC9HGzbT9ickNfq5O7l5rCg56xhiHBA/s400/rdwr_charts_9-23.gif)
I've highlighted the gap up - point being, this thing can move a lot and is in the midst of "waiting."
There is built up anticipation in the options in Oct; i.e. either this thing gaps up or gaps down, but $35 doesn't seem real stable for the long term. The Oct IV is over 82, while Nov IV is just 64. The Skew Tab snap illustrates this phenomenon perfectly (click to enlarge).
![](https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEgmVUUf0awq2uhYjriyrN8FD8ZDYYF88ECMEF_oInppOqQ-YOgnQP4wEircfgUIy-joFJH4x9Oe4kqz387PMk-GTYgwieuYMFUFYLrTSGgn5kbi416xt4LpWXqB4dCRjMVbi8rgCIh4sXQ/s400/rdwr_skew_9-23-2010.gif)
We see a fairly flat skew, actually surprisingly not upward bending. The shape of the skew is less of interest though, it's the absolute vol difference between Oct and Nov I'm eyeing.
![](https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEiOP9tWnhyxFdjDlLn9RW70HV4v3geT40v1KDsS5TkbhjSBBeaS8sbFm-63AsbZHR7PxtsntnLKaa4ciWMXYbqDEk0xYzwiiu0qz_v3mDJ8_Q2BCZjtp7LHiiZBMG7GT89mJ9UQaa9H6xk/s400/rdwr_options_9-23.gif)
Possible Trades
1) Sell the Oct 35 straddle @ $5.75 buy the Nov 35 straddle for $7.40. That's a net debit of $1.65.
The risk to this trade is that the stock moves far away from the 35 strike, essentially forcing the max loss of the full $1.65. A takeover or a confirmed "no-takeover" can easily move this stock price far from $35.
2) Sell the Oct 30/40 strangle @ $2.10, buy the Nov 35 straddle for $7.40. That's a net debit of $5.30.
If the stock moves exactly $5 away from the 35 strike in Oct, this becomes a big winner. If it moves far away from even the short strangle (<< $30 or >>$40), then it's max loss becomes just $0.30. A massive vol decline with the stock staying at $35 (like a confirmed takeover for $35) yields the max loss of $5.30, which is considerable.
These are actually quite risky trades, please note.
This is trade analysis, not a recommendation.
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