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Strategies & Market Trends : Canadian Options
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To: Jan Johnstone who wrote (600)7/2/1997 10:44:00 PM
From: Dave.S   of 1599
 
Jan:

The TSE recently posted a job opening entitled "TSE Web Site Manager" which indicated that they are moving towards rectifying this serious gap in public relations.

The TSE surveillance group and the OSC does read all our postings. After I wrote a message last month about insider trading of options, a new member of the TSE group approached me and asked that if I see anything suspicious could I report it to him! I wonder if I could send them an invoice...

The message was:

To: william smith (527 )
From: Dave.S
Jun 5 1997 8:07PM EST
Reply #528 of 601

Frequently a large transaction in an equity option can signal some news is imminent. I will give 3 examples in my experience.

1) Today someone brought 400 July 4 Puts for $1.60 on Gandalf. After the close the company announced it was seeking buyers for the company at much less than the current market price.

2) In September, 1995 there was huge buying of Systemhouse calls right out of the blue one day while the stock did not move from its $10 dollar level. The next morning - bang - up $7 on a takeover by MCI.

3) During 1993 for 3 quarters in a row there was large buying of Puts on NTL the day before earnings were released. In every case the stock dropped the next day, by $5 to $7.

The moral of the story is, watch for these transactions. You can make some quick money on occasion.

I reprinted this because it may relate to the purchase of 8000 July 17 calls of NA recently.

Dave
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