Was Someone Tipped Off To The LinkedIn Sale?

D

dealmaker

Suspicious trading activity ahead of Microsoft’s big LinkedIn announcement.

When LinkedInLNKD-0.22%announced this morning that it would be acquired for $26.2 billion byMicrosoftMSFT-0.60%, the entire tech and business press seemed caught off guard. There had been no rumors circulating about such a deal, nor was there even a strategic Sunday night media leak. Moreover, the company’s share price actually fell last Friday by a few dollars per share (closing 49.53% below Microsoft’s $196 per share offer).

But it does appear that someone might have known what was coming.

http://fortune.com/2016/06/13/linkedin-microsoft-insider-trading/
 
RE: "Was Someone Tipped Off To The LinkedIn Sale?"



IMO ......... No

I had a quick look at the LNKD weekly option chain on Monday and the Volume/OI was low for the previous Friday - nothing out of the ordinary.



:)
 
OptionGuru said:
RE: "Was Someone Tipped Off To The LinkedIn Sale?"



IMO ......... No

I had a quick look at the LNKD weekly option chain on Monday and the Volume/OI was low for the previous Friday - nothing out of the ordinary.



:)
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Plus, as the article states it appears the "suspicious" trades were part of an iron condor which isn't what you'd do if you knew about a surprise acquisition. The SEC may miss a lot but they do a heck of a lot of successful prosecutions of people who make a killing on options the day before an announcement. You'd have to be a complete idiot to trade that and think you wouldn't be caught (and clearly there are plenty of said idiots).
 
Does not look like anything out of the ordinary, had it been something huge, the SEC would surely get on top of it no doubt, gov hates when citizens make easy money.
 
FreakofNature said:
Does not look like anything out of the ordinary, had it been something huge, the SEC would surely get on top of it no doubt, gov hates when citizens make easy money.
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Or they're individuals doing the job they're paid to do, something I'd think even a gubmn't hater would appreciate?
 
http://www.reuters.com/article/us-linkedin-m-a-microsoft-options-idUSKCN0YZ2HO
This is one condor that will never soar.

Microsoft Corp's (MSFT.O) announcement on Monday that it will buy LinkedIn Corp (LNKD.N) for $26.2 billion sent shares of the professional social networking firm into the stratosphere.

And while that out-of-the-blue news gave most LinkedIn shareholders a big reason to cheer, one trader who had just laid an intricate options bet looks to be smarting from a big loss.

On Friday, the largest trade in LinkedIn's options was an "iron condor," a complex strategy that involves buying and selling of call and put options simultaneously.

Buying a call conveys the right to purchase shares at a fixed price in the future, while buying puts conveys the right to sell shares. Selling calls and puts creates the opposite obligation.

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The trade would have delivered its maximum return if LinkedIn shares effectively flatlined around Friday's level near $131 over the next two months. But then LinkedIn shares shot up 47 percent after the Microsoft news, torpedoing the trade and leaving the trader with an estimated loss of nearly $1 million.

The trader, whose identity is not known, bought 500 LinkedIn calls betting on the shares rising above $185 by mid-August, and sold the same number of calls betting on the shares staying below $160 by that date.

At the same time, the trader also bought 600 puts that would profit if the shares dipped below $115, and sold the same number of puts that bet the shares would stay above $125.

All in, the trader pocketed roughly $275,000 for setting up the trade and would get to keep it all as long as the shares held between $125 and $160 through the August expiration of the options.

Instead, with Microsoft offering $196 a share and the stock jumping to north of $192, the position is well under water. The trader stands to lose a little under $1 million, according to a Reuters calculation.

"A day after you sell it, there is a buyout - I would call it the worst-case scenario," Henry Schwartz, president at options analytics firm Trade Alert said.
 
rolando87 said:
That is some shitty luck but hes probably a whale anyway and can swallow the loss.
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Haven't pulled up the info but sounds like a classic short gamma high probability trade that works well until it doesn't because the gamma goes through the roof when approaching the barrier. Picking up pennies in front of a steamroller as they say. Not shitty luck, inevitable.
 
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