'It's too convenient to overlook as normal market activity," says one options trader of the surge in call option activity in magicJack (CALL) just days before Whitney Tilson touted the stock as his next multi-bagger.
Options trading volume flew to more than 10x the typical level on January 27, with the action taking place in the February $15 calls. First, a large amount of sales drove the price of the thinly traded contract sharply lower (to $0.35 from $0.50). Immediately following those sales, a trader purchased 3,500 of the calls at an average cost of $0.48 each. At yesterday's closing price for the stock of $16.52, the trader would have tripled his/her money.
Tilson's Kase Capital purchased 165K shares of CALL during Q4 and has continued to buy this year. Tilson says he wasn't even aware options on magicJack were listed and has no idea if anyone caught wind of the investment ahead of his public filing.