Posts Tagged ‘3COM’

$1.3 million lost in blatant but failed attempt at insider trading?

Welcome to Baruch at Ultimi Barbarorum.*  In this post, Baruch revisits the alleged, insider trading of 3Com options, casting doubt as to whether the calls were bought by persons with inside information prior to the takeover. More likely, scared shorts were trying to hedge their positions. – Ilene

$1.3 million lost in blatant but failed attempt at insider trading?

 

Courtesy of Ultimi Barbarorum

The blogosphere made the catch! The Interweb protects the rest of us from evil doers! The world is ablaze with the news that prior to the 3Com buyout announced by HP last week, there was an unusual amount of volume in the $5 november call in 3Com. We’re all pretty sensitised to insider trading at the moment, and so this looks as clear cut and beautiful a case of  evil-doers caught with their hands in the till as we are likely to see in our time on earth. As Tyler Durden puts it:

This is so blatant it is sufficiently stupid that even the SEC will presumably catch the perpetrator. Here’s to hoping the trader ends up being Galleon’s Raj Raj buying options from his E-Trade account while on bail. Of course, we fully expect any prosecution case against the perpetrator to fall apart at the seams courtesy of a completely inept legal team at the SEC and the Justice Department.

Oh really? Before the Zero Hedge folks get the pitchforks out, let’s stop and think a bit. Let us be splitters, and not lumpers, and we might see that would be quite reasonable for the SEC and DoJ not to prosecute anyone at all. Using the principle of Occam’s Razor, they may well tend to conclude that no insider trading took place.

Let’s get technical here. Do forgive Baruch if you get lost (because it may be that you’re not actually all that bright and that’s not his fault). In the case of the unusual volume in the 3Com options, you should know that incredibly unusual volumes in options is not terribly unusual, if you follow me. It is in fact the case that the volume of a particular option resides, as Taleb would have it, in Extremistan. It is subject to many many days of low and limited trading, and very few days of extremely high volume, orders of magnitude above the norm, where most of the total…
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Citizens On Patrol: The Blogosphere As Regulator

Bloggers also coin new words, for example, "embiggen." – Ilene

Citizens On Patrol: The Blogosphere As Regulator

Tonight we witnessed a watershed event in financial blogging, and it concerns The Case of Who Front-Ran the 3Com Takeover.

By now, the only people out there still trying to use options contracts to profit from inside information are the brain-dead and the citizens of non-extradition countries.  As is well known, I am a huge proponent of the financial blogosphere and this evening’s 3Com options bust just gave me goosebumps.

The story is this:

At 4pm, shares of telco equipment company 3Com (COMS) were halted followed by the announcement of an acquisition by Hewlett-Packard at a 40% premium.  The financial blogosphere sprang into action, immediately pointing out that today’s trading volume in 3Com’s options was triple its 4-week daily average.  Options are the weapon of choice for the inside information crook as they give you the most bang for your buck on a near-term jump in a stock.

OptionMonster.com’s Jon Najarian picked this 3Com options activity up, probably first, and posted the below via Twitter:

(click image to embiggen)

From OptionMonster.com

Najarian’s revelation was immediately followed by separate but equally incisive comments from some of the biggest and most influential market commentators out there.  None of this was coordinated by a producer at CNBC nor was it orchestrated by the editorial staff at the Wall Street Journal.

Rather, it was an organic meme that spread around the financial web by means of Twitter, WordPress, Blogspot and Typepad.

The mainstream media picked up on this insider trading angle only AFTER the bloggers nailed it, at least from what I’ve seen based on the times of the articles and posts.

Now we don’t know for sure whether or not illegal activity took place, but if it quacks like a duck…

Congratulations to Jon Najarian of OptionMonster.com, Tyler Durden of Zero Hedge, Andrew Ross Sorkin of DealBook and Karl Denninger of Market-Ticker.

UPDATE: Reader MarketAddict informs me that:

OptionRadar on StockTwits tweeted the unusual call volume during the day today:

http://twitter.com/OptionRadar/status/5623636484

Ladies and Gentlemen of the stock market, I give you your new citizen-regulators.

Here are the referenced links:

Najarian’s TwitPic (TwitPic)

1.5 Million in Blatant Insider Trading Activity (Zero Hedge)

Whispers About 3Com  (DealBook)

Blatant Insider Call Buying (Market-Ticker)

 


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$1.5 Million In Blatant Insider Trading Profit Following 3Com Acquisition (Or An Innocent Calendar Spread)

Maybe we should rename this section the "Insider Trading Zone" and get a little more action. – Ilene

$1.5 Million In Blatant Insider Trading Profit Following 3Com Acquisition (Or An Innocent Calendar Spread)

Courtesy of Tyler Durden at Zero Hedge

3Com’s acquisition by Hewlett Packard for $7.90/share after the close today came as a surprise to many, but not all. Because someone bought 3 times the open interest in November $5 calls and 15 times the open interest of the December calls. In summary: 3,961 Nov $5 calls were purchased today (964 open interest) for $0.65, as were 3,269 December $5 Calls (210 open interest) for $0.85. The profit, assuming the insider action was by one entity, is about $870,000 on the Novembers and $650,000 on the December strikes, for a not too shabby illegal daily P&L of $1.5 million. This is so blatant it is sufficiently stupid that even the SEC will presumably catch the perpetrator. Here’s to hoping the trader ends up being Galleon’s Raj Raj buying options from his E-Trade account while on bail. Of course, we fully expect any prosecution case against the perpetrator to fall apart at the seams courtesy of a completely inept legal team at the SEC and the Justice Department.

The chart below summarizes the trading action in COMS $5 near term calls.

And here one can see what a blazing outlier today’s volume action was in December $5 calls.

3com 

h/t ever vigilant momo chaser C-Mac

*****

Zero Hedge later issued the following report on the squidy tentacled Goldman Sachs’ possible involvement.

Goldman And The 3Com "Insider Trading" Connection

Courtesy of Tyler Durden

Following up on our earlier disclosure about potential insider trading in 3Com stock, we have uncovered something interesting. Did Goldman (in)advertently tip off clients that 3Com was potentially in strategic negotiations? 3Com was previously supposed to present at Goldman’s Data Center Techtonics Conference today at the Sheraton Hotel in New York (Agenda below). In a limited distribution note, Goldman yesterday advised selected clients that 3Com had withdrawn at the last minute from the Conference. As those in the industry are well aware, any last minute switches of this kind are indicative of imminent good or bad news dissemination, and more often than not are associated with some strategic announcement.

While the person buying…
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ValueWalk

Coronavirus stimulus check 2: Get it together, Congress

By Michelle Jones. Originally published at ValueWalk.

Many Americans are waiting for coronavirus stimulus check number 2, and the June jobs report caused some to think there won’t be one. However, it sounds like a second round of IRS stimulus checks is still possible. In fact, we might even be able to say that it’s likely.

Q1 2020 hedge fund letters, conferences and more

Mixed unemployment numbers

The Department of Labor showed that the U.S. economy added 4.8 million jobs last month, which is the largest increase ever recorded. ...



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Zero Hedge

"Panic-Driven Hoarding Of Bank Notes": People Aren't Abandoning Cash During The Pandemic, They're Socking It Away

Courtesy of ZeroHedge View original post here.

Habits change in the midst of a global recession, not to mention a global pandemic. We have already looked at how the pandemic has caused seismic shifts in many industries, but it is also causing a shift in how people think about, handle and (in this case) hoard cash. 

While we have been told non-stop that the pandemic is going to prompt the demise of paper currency and the words "digital dollar" continue to make appearances in government white papers and studies, the Bank of England found that there was a...



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Phil's Favorites

Coronavirus deaths and swelling public sector debt share a data-quality problem

 

Coronavirus deaths and swelling public sector debt share a data-quality problem

Different countries report coronavirus data differently. Shutterstock.com

Courtesy of Marion Boisseau-Sierra, Cambridge Judge Business School

Watching scientists, politicians and journalists struggle to compare national death rates from the coronavirus pandemic, I had an acute case of déjà vu. Though the virus may be novel, the confusion generated by inconsistent data standards is anything but. It’s something I&...



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Biotech/COVID-19

Coronavirus deaths and swelling public sector debt share a data-quality problem

 

Coronavirus deaths and swelling public sector debt share a data-quality problem

Different countries report coronavirus data differently. Shutterstock.com

Courtesy of Marion Boisseau-Sierra, Cambridge Judge Business School

Watching scientists, politicians and journalists struggle to compare national death rates from the coronavirus pandemic, I had an acute case of déjà vu. Though the virus may be novel, the confusion generated by inconsistent data standards is anything but. It’s something I&...



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Chart School

Golds quick price move increases the odds of a correction

Courtesy of Read the Ticker

Every market corrects, maybe profit taking, maybe of allowing those who missed out, to get in!


The current open interest on the gold contract looks to high after a very fast price move, it looks like 2008 may be repeating. A quick flushing out of the weak hands open interest may take place before a real advance in price takes place. The correction may be on the back of a wider sell off of risk assets (either before of after US elections) as all assets suffer contagion selling (just like 2008).

This blog view is a gold price correction of 10% to 20% range is a buying opportunity. Of course we may see  a very minor price correction but a long time correction, a price or time is correction is expected, we shall watch and...

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The Technical Traders

Wild Volatility Continues As US Markets Attempt To Establish New Trend

Courtesy of Technical Traders

We’ve continued to attempt to warn investors of the risks ahead for the US and global markets by generating these research posts and by providing very clear data supporting our conclusions.  Throughout the entire months of May and June, we’ve seen various economic data points report very mixed results – and in some cases, surprise numbers as a result of the deep economic collapse related to the COVID-19 virus event.  This research post should help to clear things up going forward for most traders/investors.

As technical traders, we attempt to digest these economic data factors into technical and price analysis while determining where and what ...



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Kimble Charting Solutions

Nasdaq 100 Relative Strength Testing 2000 Highs

Courtesy of Chris Kimble

The tech bubble didn’t end well. BUT it did tell us that the world was shifting into the technology age…

Since the Nasdaq 100 bottomed in 2002, the broader markets have turned over leadership to the technology sector.

This can be seen in today’s chart, highlighting the ratio of Nasdaq 100 to S&P 500 performance (on a “monthly” basis).

As you can see, the bars are in a rising bullish channel and have turned sharply higher since the 2018 stock market lows. This highlights the strength of the Nasdaq 100 and large-cap tech stocks.

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Lee's Free Thinking

These Charts Show COVID 19 Is Spreading in the US and Will Kill the Economy

 

These Charts Show COVID 19 Is Spreading in the US and Will Kill the Economy

Courtesy of  

The COVID 19 pandemic is, predictably, worsening again in much of the US. Only the Northeast, and to a lesser extent some Midwestern states, have been consistently improving. And that trend could also reverse as those states fully reopen.

The problem in the US seems to be widespread public resistance to recommended practices of social distancing and mask wearing. In countries where these practices have been practi...



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Digital Currencies

Blockchains can trace foods from farm to plate, but the industry is still behind the curve

 

Blockchains can trace foods from farm to plate, but the industry is still behind the curve

App-etising? LDprod

Courtesy of Michael Rogerson, University of Bath and Glenn Parry, University of Surrey

Food supply chains were vulnerable long before the coronavirus pandemic. Recent scandals have ranged from modern slavery ...



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Members' Corner

Coronavirus, 'Plandemic' and the seven traits of conspiratorial thinking

 

Coronavirus, 'Plandemic' and the seven traits of conspiratorial thinking

No matter the details of the plot, conspiracy theories follow common patterns of thought. Ranta Images/iStock/Getty Images Plus

Courtesy of John Cook, George Mason University; Sander van der Linden, University of Cambridge; Stephan Lewandowsky...



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Insider Scoop

Economic Data Scheduled For Friday

Courtesy of Benzinga

  • Data on nonfarm payrolls and unemployment rate for March will be released at 8:30 a.m. ET.
  • US Services Purchasing Managers' Index for March is scheduled for release at 9:45 a.m. ET.
  • The ISM's non-manufacturing index for March will be released at 10:00 a.m. ET.
  • The Baker Hughes North American rig count report for the latest week is scheduled for release at 1:00 p.m. ET.
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Promotions

Free, Live Webinar on Stocks, Options and Trading Strategies

TODAY's LIVE webinar on stocks, options and trading strategy is open to all!

Feb. 26, 1pm EST

Click HERE to join the PSW weekly webinar at 1 pm EST.

Phil will discuss positions, COVID-19, market volatility -- the selloff -- and more! 

This week, we also have a special presentation from Mike Anton of TradeExchange.com. It's a new service that we're excited to be a part of! 

Mike will show off the TradeExchange's new platform which you can try for free.  

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Mapping The Market

How IPOs Are Priced

Via Jean Luc 

Funny but probably true:

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Philip R. Davis is a founder Phil's Stock World, a stock and options trading site that teaches the art of options trading to newcomers and devises advanced strategies for expert traders...

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