9:10am(EST)

Futures are mixed as we head towards the opening bell this morning.  Dow futures are lower by 20, S&P 500 futures are off by 2 while the Nasdaq futures are up 4 points.

There was plenty of action in E*Trade Financial (ETFC, $1.84, up $0.11) last Friday as over 60 million shares traded hands.  There was a report that the company is in “advanced” talks regarding a sale.

It’s hard to get excited about a company who once dominated the online brokerage industry and a share price at less than $2.  From 1998 through 1999 this was one of the highest of flying stocks as two-for-one splits were common and shares made new highs daily.

There has been a lot of speculation as to who might buy the troubled brokerage firm but E*Trade has brand awareness which should account for some kind of premium.  TD Ameritrade (AMTD, $18.32, up $0.10) and Charles Schwab (SCHW, $19.00, down $0.18) have been in the mix as possible acquirers of E*Trade but we really don’t see an option trade with this one.

Option volume was brisk and the stock already trades like one.  However, we are avoiding options on stocks that trade under $5.00 because of the risk.  That still didn’t stop traders from placing huge bets on the February 2 calls (EUSBF, $0.12, up $0.07) which opened at 4 cents and returned 200% by the closing bell.  Over 10,000 contracts traded.

The April 2 calls (EUSDF, $0.20, up $0.05) traded 3,000 contracts after opening at 14 cents.  Considering this has been an ongoing rumor for some time and the fact that it would be safer to buy the stock, these two call options could expire worthless if no bid comes.  Stay away…

We have updated the Members Area for our current trades and there a few trades we are watching this morning.  If we see something, we will send out an alert.

]]>