Obvious Insider Trading In Ann Taylor Options Ahead Of Earnings
At this point blatant episodes of insider trading are a weekly if not daily occurrence. While we still expect to hear back from our friends over at Mary Schapiro's woefully underfunded Syndicate Encouraging Corruption (SEC), regarding the previously disclosed insider trading in New York Bancorp, here is another one for Mary and her gray matter-challenged subordinated to mull, this time involving clothing retailed AnnTaylor.
Trading of bullish AnnTaylor Stores
Corp. options surged to a 10-week high yesterday before the
women’s clothing retailer boosted its fourth-quarter sales
forecast today in an unscheduled release.
“Either this was a very savvy investor or the information
was leaked,” said Frederic Ruffy, the senior options strategist
at WhatsTrading.com, a New York-based provider of options market
analysis. “The call buying was just a couple of hours before
the close yesterday.”
Almost all of yesterday’s trading of 5,766 options giving
the right to buy the stock was concentrated in the March $15
calls, which closed at 45 cents yesterday. They more than
tripled to $1.65 today as the shares jumped the most in nine
months, adding 19 percent to $15.88 at 3:42 p.m. in New York.
With the options purchased at $0.45 and now trading at $1.65, every call attained a profit of $1.20, or roughly $690,000 on the total 5,766 call options purhcased yesterdaty.
Here is a chart demonstrating the highly abnormal trading patterin in ANN, which was very likely precipitated by a leak of insider information from the firm.
In reality, with a hearing currently proceeding in which Senators are trying to perpetuate the "legality" of gambling, front running and market manipulation (Senator Corker, we will have some talking points later, which while not as eloquent as those prepared for you by Goldman Sachs will hopefully provide some much needed deobfuscation), why would anyone be even remotely surprised that this kind of blatant insider trading is a daily occurrence. We hope the perpetrator of the alleged illegal trades is not punished, and instead is made into a symbol of just how broken this market is.