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The following is a list of 20 takeover targets, based on open interest in the options market. To develop the list, we started by creating a universe of about 80 stocks that have been labeled as takeover targets by various publications, including Barrions, Wall Street Journal, Marketwatch, TheStreet.com and StreetInsider.

We then collected data on open options positions for this universe of takeover targets. The stocks mentioned here have the lowest Put/Call ratios in this universe of takeover targets (i.e. most bullish sentiment in the options market). The complete universe that we used for the screen can be accessed here.

Options data sourced from Schaeffer's, and short float data sourced from Finviz. More details below.

click for expanded images

1. Cott Corporation (NYSE:COT): Soft Drinks Industry. Market cap of $566.61M. Call open interest at 21,408 contracts, vs. put open interest at 274 contracts (Put/Call ratio of 0.01). Price/FCF ratio at 5.79. Short float at 3.21%, which implies a short ratio of 2.92 days.

2. Falconstor Software Inc. (NASDAQ:FALC): Business Software & Services Industry. Market cap of $152.64M. Call open interest at 250 contracts, vs. put open interest at 10 contracts (Put/Call ratio of 0.04). Price/FCF ratio at 90.86. Short float at 4.18%, which implies a short ratio of 9.35 days.

3. California Pizza Kitchen Inc. (NASDAQ:CPKI): Restaurants Industry. Market cap of $375.03M. Call open interest at 7,021 contracts, vs. put open interest at 866 contracts (Put/Call ratio of 0.12). Price/FCF ratio at 9.17. Short float at 5.79%, which implies a short ratio of 3.99 days.

4. Quicksilver Resources Inc. (NYSE:KWK): Independent Oil & Gas Industry. Market cap of $2.01B. Call open interest at 31,886 contracts, vs. put open interest at 3,762 contracts (Put/Call ratio of 0.12). Short float at 7.63%, which implies a short ratio of 2.86 days.

5. Cal Dive International Inc (NYSE:DVR): Oil & Gas Equipment & Services Industry. Market cap of $443.73M. Call open interest at 4,139 contracts, vs. put open interest at 647 contracts (Put/Call ratio of 0.16). Price/FCF ratio at 5.14. Short float at 4.82%, which implies a short ratio of 4.29 days.

6. Ameristar Casinos Inc. (NASDAQ:ASCA): Resorts & Casinos Industry. Market cap of $974.98M. Call open interest at 3,712 contracts, vs. put open interest at 678 contracts (Put/Call ratio of 0.18). Price/FCF ratio at 11.18. Short float at 7.15%, which implies a short ratio of 5.53 days.

7. Sourcefire, Inc. (NASDAQ:FIRE): Security Software & Services Industry. Market cap of $747.04M. Call open interest at 7,230 contracts, vs. put open interest at 1,309 contracts (Put/Call ratio of 0.18). Price/FCF ratio at 25.34. Short float at 12.08%, which implies a short ratio of 6.21 days.

8. Fortinet Inc. (NASDAQ:FTNT): Computer Peripherals Industry. Market cap of $1.43B. Call open interest at 10,460 contracts, vs. put open interest at 1,934 contracts (Put/Call ratio of 0.18). Price/FCF ratio at 20.96. Short float at 6.69%, which implies a short ratio of 4.62 days.

9. Biogen Idec Inc. (NASDAQ:BIIB): Biotechnology Industry. Market cap of $13.21B. Call open interest at 25,185 contracts, vs. put open interest at 6,864 contracts (Put/Call ratio of 0.27). Price/FCF ratio at 11.67. Short float at 4.42%, which implies a short ratio of 3.16 days.

10. Smithfield Foods Inc. (NYSE:SFD): Meat Products Industry. Market cap of $2.71B. Call open interest at 22,031 contracts, vs. put open interest at 6,310 contracts (Put/Call ratio of 0.29). Price/FCF ratio at 35.88. Short float at 6%, which implies a short ratio of 3.89 days.

11. Novell Inc. (NASDAQ:NOVL): Security Software & Services Industry. Market cap of $2.00B. Call open interest at 18,853 contracts, vs. put open interest at 7,111 contracts (Put/Call ratio of 0.38). Price/FCF ratio at 37.96. Short float at 2.02%, which implies a short ratio of 2.21 days.

12. SLM Corporation (NASDAQ:SLM): Credit Services Industry. Market cap of $5.47B. Call open interest at 76,919 contracts, vs. put open interest at 29,024 contracts (Put/Call ratio of 0.38). Short float at 5.68%, which implies a short ratio of 5.81 days.

13. Hasbro Inc. (NASDAQ:HAS): Toys & Games Industry. Market cap of $5.72B. Call open interest at 8,135 contracts, vs. put open interest at 3,179 contracts (Put/Call ratio of 0.39). Price/FCF ratio at 14.44. Short float at 2.15%, which implies a short ratio of 1.25 days.

14. Barnes & Noble, Inc. (NYSE:BKS): Specialty Retail, Other Industry. Market cap of $868.09M. Call open interest at 23,178 contracts, vs. put open interest at 9,475 contracts (Put/Call ratio of 0.41). Short float at 42.77%, which implies a short ratio of 11.83 days.

15. AK Steel Holding Corporation (NYSE:AKS): Steel & Iron Industry. Market cap of $1.39B. Call open interest at 103,026 contracts, vs. put open interest at 44,553 contracts (Put/Call ratio of 0.43). Short float at 10.85%, which implies a short ratio of 1.29 days.

16. E*TRADE Financial Corporation (NASDAQ:ETFC): Investment Brokerage Industry. Market cap of $2.83B. Call open interest at 335,934 contracts, vs. put open interest at 146,076 contracts (Put/Call ratio of 0.43). Price/FCF ratio at 7.98. Short float at 2.53%, which implies a short ratio of 1.4 days.

17. Xyratex Ltd. (NASDAQ:XRTX): Data Storage Devices Industry. Market cap of $353.74M. Call open interest at 5,988 contracts, vs. put open interest at 2,754 contracts (Put/Call ratio of 0.46). Price/FCF ratio at 12.14. Short float at 5.31%, which implies a short ratio of 2.32 days.

18. Cedar Fair LP (NYSE:FUN): General Entertainment Industry. Market cap of $632.86M. Call open interest at 2,761 contracts, vs. put open interest at 1,292 contracts (Put/Call ratio of 0.47). Price/FCF ratio at 10.79. Short float at 0.56%, which implies a short ratio of 2.1 days.

19. Hansen Natural Corporation (HANS): Soft Drinks Industry. Market cap of $4.04B. Call open interest at 19,620 contracts, vs. put open interest at 9,269 contracts (Put/Call ratio of 0.47). Price/FCF ratio at 17.97. Short float at 1.96%, which implies a short ratio of 1.57 days.

20. Websense, Inc. (NASDAQ:WBSN): Internet Software & Services Industry. Market cap of $850.9M. Call open interest at 4,196 contracts, vs. put open interest at 1,955 contracts (Put/Call ratio of 0.47). Price/FCF ratio at 9.37. Short float at 12.68%, which implies a short ratio of 9.56 days.

Disclosure: No positions

Source: Top 20 Takeover Targets in the Options Market