On Wednesday, Mylan said it made a proposal to acquire Perrigo for about $29 billion in cash and stock, sending the Dublin, Ireland company's shares up by more than 30 percent to an all-time high of $215.73. Mylan shares rose as much as 16 percent to a high of $69.45.

 

Options activity has been known to spike before the public announcement of deals and the U.S. Securities and Exchange Commission has in the past announced enforcement action for alleged insider trading involving options trading.

 

On March 24, the volume in Perrigo's options, which on average trade less than 600 contracts a day, jumped to more than 4,700 contracts, driven by a large options bet on Perrigo shares rising sharply before mid-May.

 

"They were positioning for an upside move and they had their eye on a catalyst. It could have been earnings or it could have been some kind of deal talk," said optionMonster.com lead analyst David Russell.

 

A trader appears to have bought 2,000 calls and sold the same number of puts, for a net payout of about $400,000, said Fred Ruffy, options strategist at WhatsTrading.com.

 

Calls convey the right to buy the stock at a certain price in the future and puts impart the right to sell the stock at a fixed price at a future date.

 

The options were set to expire in May 15 and would capture Perrigo's third-quarter results on May 4.

 

On Wednesday, the value of these calls jumped, at one point to as much as $6.8 million, according to Thomson Reuters data.

 

A spokeswoman for the Financial Industry Regulatory Authority, which oversees securities firms, declined to comment on the options activity. The U.S. Securities and Exchange Commission did not immediately respond to a request for comment.