HP / 3Com: Blatant Insider Call Buying

The story:

PALO ALTO, Calif. & MARLBOROUGH, Mass.--(BUSINESS WIRE)--HP (NYSE: HPQ - News) and 3Com Corporation (NASDAQ: COMS - News) (“3Com”) today announced that they have entered into a definitive agreement under which HP will purchase 3Com, a leading provider of networking switching, routing and security solutions, at a price of $7.90 per share in cash or an enterprise value of approximately $2.7 billion. The terms of the transaction have been approved by the HP and 3Com boards of directors.

And the insider trading activity today:

There of course was every reason for nearly 4,000 $5 front-month calls, with nine days remaining, to trade against this issue and an open interest of less than a thousand today.

Those 4,000 calls appear to have recorded (assuming the price rises immediately to close to the deal price) a roughly $2.10 profit each, and since each call is 100 shares, someone made $840,000 due to their "prescient" knowledge that they should buy these $5 calls which, I might add, were more than a half-buck in the money and had nine days left to expiration.

If you believe that's a coincidence I'm Santa Claus.

The scam factory continues unabated....

Comments

[MarketGuy:]

Karl,

I hope you forwarded this data to the SEC or your congressional representative. If enough of us do this, it may get more than a "look".

Nov 13 07:05 AM

[Curious Bys...:]

And the agencies involved with controlling this kind of thing look the other way...

If I hear one more government puke talk about needing more regulation my head is going to explode. They can't even do anything with the stuff already on the books, what good is more going to do???

When plunder becomes a way of life for a group of men living together in society, they create for themselves in the course of time a legal system that authorizes it and a moral code that glorifies it. --Fredric Bastiat

Nov 13 04:16 PM