Option activity bubbles over in Anheuser-Busch

By Doris Frankel

CHICAGO (Reuters) - Option activity in Anheuser-Busch Cos Inc was notably bullish on Friday as traders snapped up calls, hoping to catch a share price rally on speculation the largest U.S. brewer would be acquired.

After reports that Belgian brewer InBev NV, the world's second-biggest by volume, was working on a $46 billion offer for Anheuser-Busch, the number of call options rose to roughly 247,000 contracts, nine times the normal turnover, according to option analytics firm Trade Alert.

An equity call option gives the buyer a chance to profit on a stock when the share price rises.

InBev, Anheuser both declined comment.

The prospect of a merger sparked a sharp rise in the shares of the brewer of Budweiser beer, which ended 7.7 percent higher at $56.61.

Many investors bought calls, betting on possible share gains in Anheuser early next week, which might occur if an announcement happens over that weekend, while others booked profits on their bullish positions.

U.S. financial markets are closed on Monday for the U.S. Memorial Day holiday.

"Given that many acquisitions have been announced during or just after weekends and the fact that European markets will be open on Monday, traders do not want to miss on a potential opportunity," said Scott Fullman, director of derivative investment strategy at New York-based broker-dealer WJB Capital Group.