Many/most readers will have noticed that the way insider trading has been detected on the proposed Dow Jones/News deal is via unusual option activity. In the case of Dow Jones, there was some big buying pre-announcement of $45-ish calls that were then trading below $1. Post-announcement, they soared to $12, making buckets of money for some smart (ahem) people.
Without getting any deeper into the regulatory side of things, one of the things I like to keep an eye is unusual option volume, whether on the call or put side. A good resource for doing that sort of thing is Schaeffers, which has the appropriately named “Unusually High Option Volume” page. It looks the ratio of the prior days option volume to the average volume over the prior month. While Schaeffers doesn’t do it, you can obviously filter this data for known info, such as earnings releases, etc., which will drive option spikes — or better yet, include those companies, but compare the spikes to what we saw around previous earnings releases. (The latter is closer to what I do via a little program I run at IGreed HQ.)
The current unusual-activity leader? Andrew Corporation, which last week saw traded call options at 19 times its usual level. Mind you, that may be explained by the company’s earnings release last week, so you’d have to look back and see if there was similar option activity last time it released earnings.