SEC looking at suspicious option trading before rumor of Samsung-BlackBerry talks was reported

SEC looking at suspicious option trading before rumor of Samsung-BlackBerry talks was reported
The U.S. Securities and Exchange Commission is looking into a suspicious surge in BlackBerry call option purchases made on January 14th. Before the market closed that day, a report that Samsung was talking to BlackBerry about purchasing the company sent the latter's shares soaring 30% to a price of $12.60 from the previous day's close at $9.71.

Call options are financial instruments that allow the buyer to purchase 100 shares of stock in a company for a set price during a specified period. On January 14th, just hours before Reuters moved the rumor on its wire, someone purchased 2000 BlackBerry January 10 calls giving them the right to purchase 200,000 shares of BlackBerry for the price of $10 before they expired on January 23rd. The very risky investment was purchased at a price of 10 cents each ($20,000) and later hit a high of $2.55. At that price, the calls could have been sold at $510,000 for a nifty profit of $490,000. However, it is unclear whether the buyer of the options cashed out with such a huge gain.

After the market closed, Samsung denied that it was talking to BlackBerry and the shares opened down over $2 at $10.36 the next morning, never trading higher than $10.71 the whole day. That would have given the option buyer a chance to turn a $20,000 to $120,000 profit on his calls. If the investor held on until the option's last trading day, he could have sold the calls for approximately 70 cents giving him a $120,000 profit.

The report by Reuters stated that Samsung was planning to purchase BlackBerry for a price between $13.35 to $15.49. That represented a premium of 38% to 60% over BlackBerry's trading price at the time. The SEC is investigating whether the source of Reuters' story purchased the calls. Reuters stressed in a report on Sunday that it is not a target of the Agency's probe. Because there were only six trading days left until the calls expired, and with BlackBerry trading for less than the $10 exercise price, only someone certain of a quick price rise in BlackBerry's stock would have purchased $20,000 worth of the calls in question on the afternoon of January 14th.

source: CNBC

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20 Comments

1. cripton805

Posts: 1485; Member since: Mar 18, 2012

Someone is going to prison. Is that fraud or what charges could be filed? I think it's obvious that a lot of people scam the stock market by having inside information.

2. meanestgenius

Posts: 22773; Member since: May 28, 2014

I said that this was market manipulation from the very beginning.

3. darkkjedii

Posts: 31760; Member since: Feb 05, 2011

Uh ohhhh, someone's been naughty.

5. Mxyzptlk unregistered

Something smells fishy here.

10. Crispin_Gatieza

Posts: 3187; Member since: Jan 23, 2014

Smelling your sister's underwear again?

11. meanestgenius

Posts: 22773; Member since: May 28, 2014

Lmao! +1

14. Mxyzptlk unregistered

Crispy looks like something above is attached to your rear end.

15. meanestgenius

Posts: 22773; Member since: May 28, 2014

Feeling bum-burned? Apply aloe to burn site.

17. Mxyzptlk unregistered

Using my retort are we?

20. meanestgenius

Posts: 22773; Member since: May 28, 2014

As if you created it. Fine. Don't use the aloe. You must like the burned bum feeling. Figures you would.

22. Mxyzptlk unregistered

You would know about it wouldn't you?

23. meanestgenius

Posts: 22773; Member since: May 28, 2014

I only know about from what I've heard about you and how you like that "burned bum" feeling. Hey, don't be ashamed about it. You like what you like.

13. Mxyzptlk unregistered

Cheap 2nd grader insult. Pathetic.

16. Crispin_Gatieza

Posts: 3187; Member since: Jan 23, 2014

You got waxed again. Don't you get it? You're my bi*ch and I simply OWN you. Leave BlackBerry articles alone and the pain goes away. Know your role!

18. Mxyzptlk unregistered

Lol the only pain I feel is the stitch from laughing so hard at how pathetic you are old man.

19. Crispin_Gatieza

Posts: 3187; Member since: Jan 23, 2014

Did Bubba hurt you that bad that you need stitches?

21. Mxyzptlk unregistered

I don’t want to hear about your "soap" adventures old man.

12. FlyingDutch

Posts: 97; Member since: Jan 30, 2015

It's Sammy. What did you expect?

4. Crispin_Gatieza

Posts: 3187; Member since: Jan 23, 2014

Yep, and the new Congress wants to roll back Frank-Dodd to allow speculative trading again.

6. engineer-1701d unregistered

sounds like someone watched the movie blackhat thats what they did to drive up the price of soy and sell for 27 million

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