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The Underground Trader: Update on Burger King and Tomorrow's Almanac Prediction

September 2, 2010

by The TopStock Team

The Underground Trader

We wish to introduce a new periodic feature to TSP Flash Alerts: The Underground Trader. These posts are authored by a long-time friend and colleague who specializes in trading futures and options. The Underground Trader is a very close watcher of the indices and is a market junkie who cruises message boards, trading groups, news feeds and opinion sites for any edge he can get. Do not bet the ranch on any of his comments but they are usually interesting and definitely food for thought.

From The Underground Trader:

    UPDATE ON BURGER KING AND TOMORROW'S ALMANAC PREDICTION We posted before the open yesterday the unusual option activity in Burger King and the rumor mill swirling with takeover stories. As you may have heard, Burger King (BKC) is reported to have agreed to be bought by investment firm 3G Capital for $3.26 billion. The deal represents a 46%premium to Burger King’s share price before news of the deal. When we reported on it, BKC was trading between $19-20 in the pre-market and closed today at $23.59. The Sept. 20 strike call we were talking about could have been had for $.40 or so at Wednesday's open, it closed today at $3.50.

    Periodically I check out the "Stock Trader's Almanac" for historical data points and it is surprising how often the trends they cite come to pass. Unfortunately I failed to do so earlier this week. If so, I would have read, "1st trading day of September S&P up 11 of last 14 years." For tomorrow, in case you are interested, "Major market instability leading into Labor Day; lately triple digit Dow moves have become commonplace." With the jobs report due out it will be no surprise if this prediction comes to pass.

  Burger King - Last 5 Years
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      Burger King - Intraday
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      Burger King - Last 12 Months
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    Disclosure - Mr. Moenning owns positions in securities mentioned: none

    Note: Observations by the Underground Trader should not be construed as trade recommendations, but rather are reports on marketplace activity and his view on the subject.

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