Idle Takeover Talk? Not So for Titanium Metals, USG

With so much speculation about which company is next to really get a takeover offer, the closest investors may get to really getting a true hint is via options activity -- and even that, as I pointed out in a Wall Street Journal story a few weeks ago, isn't fool proof. Thursday may have been a peak in takeover talk. Of the 20 or so companies mentioned in a recent Barron's piece, which are most likely to get the nod: According to Jon Najarain, of OptionMonster, Titanium Metals (TIE) and USG (USG) are the only ones with the type of activity that appears relatively informed.

According to Najarain:

Both have been all over our Heat Seeker for the past two sessions and today, TIE traded some 25,500 calls versus an average daily volume of just 3,232 contracts. Heck, that’s only a 727% increase above the norm! Most active series were the Dec 35 calls, where 4,100 contracts traded up 104% overnight. Next came the in-the-money December and March 30 calls, which traded 3,000 and 3,200 respectively.

The action in USG also fits our LBO algorithm, as its average daily call volume is 5,554 contracts, but it traded over 37,000 calls today! Turnover in the Dec 55 calls topped 7,700 contracts against an open interest of just 2,340 and these calls were up 800% since last night’s closing price, gaining $2.00 to close at $2.25. The December 52.50 and 55 calls, as well as January 55 & 60 calls were all trading in a speculative frenzy.

Key word, of course, is "speculative." Thanks, Jon. Onward.