"Renewed takeover talk and hopes of better-than-expected earnings fueled bullish options activity in the shares of CHARLES SCHWAB CORP., analysts said. The company did not immediately return phone calls seeking comment. Schwab is due to report Q4 results early next week, and it is typical to see increased options volatility and volume ahead of earnings. But on Friday, more calls rather than puts was the prevalent theme in January options, indicating some players at least were positioning for an upside earnings surprise, traders said. "The accelerated buying in front of these earnings suggests that investors may be betting on better-than-expected results," said Pete Najarian, co-founder of Web information site optionmonster.com. Analysts, on average, expect EPS for the Q4 of $0.21, including and excluding special items, according to Reuters Estimates. Many traders also noted the takeover buzz. "With unconfirmed takeover chatter around, bullish investors throughout the morning steadily bought front month calls," said Susquehanna Financial Group chief options analyst Stacey Biere Gilbert. Schwab has been frequently mentioned in the past as a takeover candidate. "But with a three-day weekend ahead, options investors want to make sure their positions are in place should something occur," said William Lefkowitz, options strategist at brokerage firm vFinance Investments." (Reuters 04:31 PM ET 01/12/2007)
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