UnumProvident Corp. (NYSE:UNM - news) shares rose nearly 8 percent on Friday on speculation the group life insurance company was going to be acquired.
"UNM Provident is a rumored takeover candidate, which is causing heavy call buying," said William Lefkowitz, options strategist.
A large number of options on UnumProvident were purchased in the derivatives market, after which the company's shares rose, traders said.
"Anytime the market sees a large buyer of call options, they immediately assume that there is a takeover story," said Steve Sosnick, equity risk manager at Timber Hill, a division of Interactive Brokers.
UnumProvident spokesman James Sabourin declined to comment.
In the options market, during the first 90 minutes of trading, a total of 19,358 calls and 2,667 puts traded, far outnumbering its normal options volume of 591 contracts, according to market research firm Track Data.
UnumProvident shares rose 7.8 percent, or $1.55, to $21.43 on the New York Stock Exchange.
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