The share price of E-Trade Financial (ETFC) soared last week on news of a Morgan Stanley (MS) buyout offer. MS is expected to acquire ETFC for $13 billion. The news sent the stock from $45 to as high as $57 on the open the day the acquisition was announced.
ETFC became a buyout target once consolidation started to occur in the brokerage industry to make up for vanishing commissions. I recently had recommended a trade buying March 13th calls at $0.71 in ETFC. Just over one week later, we were able to sell those calls out for around $10.80, a roughly 1,420% gain.