Option bets prompt suspicion

0 Comments | USA TODAY, May, 2007 | by Matt Krantz

Investors quietly betting on a big spike in Dow Jones' stock ahead of Tuesday's news have raised suspicions that the surprise bid from News Corp. wasn't such a surprise.

Roughly 4,400 call option contracts, bets that pay off handsomely if a stock spikes higher, traded Monday, the day before the offer was made public, according to Jon Najarian of OptionMonster.com. That was a significant spike in volume for Dow Jones, which typically sees little option activity. It's not unusual for just 100 contracts in the stock to trade a day, says Bernie Schaeffer, CEO of option trading firm Schaeffer's Investment Research.

"These trades stink to high heaven," Najarian says. "This isn't a coincidence. It has all the earmarks of insider trading."

It was certainly...

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