Monday, March 14, 2011

Lubrizol (LZ) - Lucky Bet On Takeover...?

LZ is trading $134.38, up 27.5% on a takeover with IV30™ down 86.9%. The LIVEVOL® Pro Summary is below.


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Cecile Vannucci at Bloomberg showed me this one (she and Jeff Kearns wrote about it earlier). On 3-9-2011 a large trade crossed the tape in the Apr 100 calls. Specifically 2168 where purchased for $2.35. The historical trades snap is included below.

The company averages ~335 calls a day and nearly 7 times that went up in this one print. I've included the Options tab as of the close of that day below.

We can see a total of 2,636 traded on essentially no OI. These were opening purchases. I also didn't see any large stock prints that day -- this feels like it was a naked purchase, but of course, I don't know for sure.

And today:
Berkshire Hathaway Inc., owned by billionaire Warren Buffett, has agreed to buy Lubrizol Corp., the world's leading producer of lubricant additives, at about 9 billion U.S. dollars, according to a statement released on Monday by the company.

Berkshire Hathaway Inc. said that it would pay 135 dollars a share in cash, 28 percent more than Lubrizol's closing price on March 11.
Source: Comtex News Network.

Let's look to the Options Tab and largest trade today (below).

The largest trade was a sale of 2,650 calls @ $23.90. Assuming this is the same position, that's 2,650 x 100 x ($23.90 - $2.35) = $5.71 million in five days.

This is trade analysis, not a recommendation.

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