Thursday afternoon, trading in animal health company Zoetis was halted on a Wall Street Journal report that the company was approached by Canada-based drugmaker Valeant Pharmaceuticals for a potential takeover. When the stock reopened, shares soared more than 11 percent into the close.
And that meant a cool win for one smart trader. And seemingly right as the news hit, one trader purchased of the June 26 weekly strike calls in Zoetis for 34 cents. Read More Animal health giant Zoetis halted for volatility on takeover report.
This isn't the first time options traders have made money on takeover talks. Just last week one trader cleaned house on reports of a Martha Stewart deal. But Nathan warns that this is not necessarily the smartest strategy for investors. I don't think you want to go out and buy calls for every stock you hear is going to be taken over or rumors floated.
Crude oil rallied more than 1 percent on Thursday helping one trader make a quarter million dollars in just 24 hours. Mike Khouw of Optimize Advisors gives an overview of how to calculate the implied move for a stock.
What's a call spread, and when should you use it? Mike Khouw breaks down the basics of this critical strategy. Sign up to receive exclusive Options Action content. Each month you'll receive an exclusive message from host Melissa Lee and insight directly from one of the members of our Options Action panel. Keep your pulse on the market with the Options Action newsletter. Options traders have been turning deal chatter into quick profits.
Read More Animal health giant Zoetis halted for volatility on takeover report "Right after the stock spiked those calls appreciated dramatically," added Nathan, founder of RiskReversal. Amanda Diaz Coordinating Producer. Options Action Trader tries a clever way to cash in on the bitcoin boom.
Chip stocks just had their worst week in two years. How to cash in on the bitcoin boom. Riding the Roku rollercoaster. Worried about more volatility? Here's how to protect your portfolio. Play catch up with energy into year end?
One trader bets there's more room to run for Alibaba. One trader bets on more pain ahead for AMD. Subscribe Follow Options Action on Twitter. Like Options Action on Facebook. Using a Call Spread. Host Bio Melissa Lee. Options Action Traders Michael Khouw.