optionsXpress shares up on talk of bid by E*Trade

NEW YORK (Reuters) - Shares of online brokerage optionsXpress Holdings Inc. (OXPS.O: Quote, Profile, Research, Stock Buzz) rose more than 5 percent on Monday and its bullish option volume increased amid speculation that E*Trade Financial Corp (ETFC.O: Quote, Profile, Research, Stock Buzz) may want to buy optionsXpress.

Near midday, roughly 10,000 calls traded in optionsXpress compared to 747 puts, according to market research firm Track Data. Particularly notable were the calls granting investors the right to buy optionsXpress shares at $25 which traded nearly 6,000 times.

These calls with strike prices slightly above the stock's spot price, fetched 75 cents a contract, up 55 cents on the day. Investors often turn to out-of-money calls because they can put the least amount of money at risk and realize the highest return if a merger does occur.

"Given the recent consolidation among online brokers, the rumor might have some merit," said Frederic Ruffy, analyst at options education firm Optionetics in Redwood City, California.

OptionsXpress declined to comment. E*Trade Financial was not immediately available for comment.

"Briefing.com is reporting an E*trade Financial for optionsXpress rumor is making the rounds," said Ruffy.

optionsXpress shares were up $1.23 to $24.29 in mid-day trading. E*Trade Financial shares were up 37 cents at $23.15.