NATI acquisition and suspicious option activity

Submitted by Waddayanow t3_11egggb in wallstreetbets

I have been following $NATI closely ever since Emerson's hostile bid and the accompanying strategic review were disclosed in January. Emerson is bidding $53 a share, up from an initial $48 offer, and in response NI adopted a poison pill. The majority shareholder and NI founder Dr. T with a ~28% holding is in favor of the acquisition.

Now, NATI has been hovering on the 50-54 range ever since, but I noticed an uptick in options volume today, 6K for March'17 50C and 6K for March'17 50P.

It might be a dud, or it might be an insider playing a straddle. If it's a straddle is it long or short? I would guess this is a long straddle, expecting either a retracted bid (sending NATI <$47) or the arrival of a new bidder for >$53, both resulting in a profit. The high break-even is very close to the $53 announced bid.

However, there is also the question of why would an insider play a straddle instead of picking a direction if he/she really knows something.

The P/L for the straddle: http://opcalc.com/QK2.

Volume data: https://optioncharts.io/options/NATI/chain/chart/volume

What do you guys think?

Positions: 1 straddle, just for the heck of it.

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VisualMod t1_jadu7qm wrote

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>TL;DR: Options activity in NATI today, straddle might be played by an insider with knowledge of Emerson's bid.
1

VisualMod t1_jadu8i4 wrote

>It is impossible to know for certain what the insider knows, or why they are playing a straddle instead of picking a direction. However, given the information that is publicly available, it seems most likely that this is a long straddle played in anticipation of either a retracted bid (sending NATI <$47) or the arrival of a new bidder for >$53. The high break-even point suggests that the insider expects NATI to move significantly in one direction or the other.

0

send_bobz_plz5678 t1_jady6g3 wrote

Without looking at a single piece of this company, and having absolutely no knowledge of the merger, or even wtf they do in the first place. Like I can't stress this enough, I won't even bother opening my favorite ticker price check tool robinhood to see a single piece of data on this company. I can tell you that what would seem more likely to me is that it's someone positioning themselves to make some money on a big move in either direction. That makes the most sense.

0