Shares in Grumman rose almost 10 per cent last Friday, in part the result of strong buying last week on the Chicago Board Options Exchange through a number of brokers. Executives of Grumman and Martin Marietta complained about the price surge when they announced the dollars 55-a-share offer on Monday. Stephen Taylor, a specialist in Grumman options at the Exchange, also filed a complaint on Tuesday, citing unusual activity in April call options on Grumman shares.
An investor would have been able to buy a Grumman call option contract - awarding him the right to buy 100 shares at dollars 45 apiece - for about dollars 25 last Wednesday, making a profit of dollars 900 per contract when it was redeemed on Monday.
The US Securities and Exchange Commission and Chicago options market are also investigating.Reuse content