I typically don’t give much credence to takeover rumors since they are false 99%+ of the time. But since I own some optionsXpress (OXPS), I won’t deny that rumors of a buyout caught my attention yesterday:
Trading of options to buy optionsXpress Holdings Inc. was the busiest in almost two years as investors bet it will be the next online derivatives brokerage to get a takeover offer.
Call trading jumped to 13,295 contracts, the most since May 2007 and 23 times the average over the last four weeks. OptionsXpress, based in Chicago, added 2.8 percent to close at $11.93 in Nasdaq Stock Market composite trading after earlier gaining as much as 5.6 percent.
“There’s takeover speculation,” said Frederic Ruffy, the senior options strategist at WhatsTrading.com, a New York-based provider of options market analysis. “Investors are taking positions with the expectation that the stock will move higher over the next few weeks.”
The discount brokerage industry is in a permanent state of regular consolidation as those who can’t build market share through organic means (superior service offerings and customer care) will buy it.
The options business is hot, and following TD Ameritrade’s (AMTD) takeover of thinkorswim (SWIM), there aren’t many sizeable options specialists to go round.
So who could be a buyer of optionsXpress? Schwab (SCHW) might be a good candidate as the OXPS platform might be a nice addition to their platform, assuming they didn’t meddle with it too much. The stock is also cheap enough that a private-equity firm might take a look at it, though it would be disastrous if the company was levered up and stripped down.
I’m holding steady now with my tiny position in OXPS, and buy a little more if it comes down.
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