FXCM Shares Gain Huge Following Options Purchase

Shares of FXCM Inc FXCM gained more than 30 percent at one point in early Tuesday trading following the purchase of August $1.50 calls. More than 1,465 August $1.50 calls have traded, more than 1.5 times the open interest of 873. Conversely, zero August $1.50 puts have traded versus an open interest of 231. The options have 87 days to expiration.

Following that lead, there is high interest in the June $1.50 calls, which have 24 days until expiration. Traders have exchanged 3,445 contracts against an open interest of 828.

FXCM last traded at $1.51. The company recently announced that it would assume operation of Citigroup Inc's C CitiFX Pro after market close on June 26.

Recently, Barclays and KBW both said that FXCM was worth $1 per share. Fate of the beleaguered company has been in doubt since the Swiss National Bank abandoned its Swiss Franc peg to the Euro in January. The unexpected move caused the Swiss currency to gain substantially in minutes, resulting in substantial losses for FXCM and its clients. FXCM subsequently went to Leucadia National Corp. LUK for a bailout.

Analysts have been critical of that bailout, arguing that the terms allow Leucadia to siphon away any profits in FXCM for the foreseeable future. In a March research note, Citigroup analysts delved deeper into the numbers, finding that 100 percent of the first $300 million in asset sales will go to Leucadia. In the next $350 million, the two companies will split revenues 50/50, while the following $500 million will go in a 90/10 split to Leucadia. Any sales over this $1.15 billion will be split 60/40 to Leucadia.

Year to date, FXCM shareholders have lost 91 percent of the company's value. In May alone, shares have slumped 24 percent, including today's rally.