A flurry of trades took place in the options of Airgas Inc. (ARG) in the days before Air Products & Chemicals Inc. (APD) announced its offer to buy the company this morning, suggesting someone could have known about the buyout plans before they were made public.

The spike in trading in Airgas "wasn't just yesterday, it was all week," said Henry Schwartz, president of Trade Alert. "It definitely looks pretty dicey."

A spokeswoman for Air Products declined to comment, while a representative for Airgas did not return a call for comment.

A bulk of the trading in Airgas options took place Thursday, the day before Air Products announced its offer to buy Airgas for $60 a share, prompting a 44% rally in the price of Airgas stock.

On that day, traders scooped up far more options in Airgas than would normally be the case and showed a clear preference for bullish contracts that make money as the price of Airgas shares climbed higher.

Airgas recently traded for $60.10, gaining 38.1% after hitting an intraday high of $62.82.

On Thursday, the activity in Airgas jumped to nine times the normal level, with traders picking up a total of about 5,000 "call" options and only 200 "put" options, according to Trade Alert. Calls convey the right to buy a stock, while puts convey the right to sell it.

The largest transaction of that day hit the tape at 1:17 EST when one trader went to the Phildelphia Stock Exchange--owned NASDAQ OMX--and bought a batch of 1,000 April $55 calls.

The trader in this case paid 10 cents for the contracts, which are now worth about $6.90. In other words, the trader shelled out roughly $10,000 for the April calls, given the size of the transaction, and could have sold them Friday for about $690,000.

But while a bulk of the action in Airgas occurred Thursday, the activity had been heating up for a few days before that. Between Monday and Thursday, traders picked up more than 8,000 calls and nearly 2,000 puts, making it the busiest four-day period in at least a year, according to Schwartz.

The trading in Airgas falls on the heels of two other buyout deals that were accompanied by suspicious options volume.

In September, the U.S. Securities and Exchange Commission charged Reza Saleh with civil securities fraud for buying options in Perot Systems Corp. in the days before Dell Inc. announced plans to buy that company. Saleh, a former employee of H. Ross Perot's investment firm, later agreed to forfeit $8.6 million in profits.

Just a few weeks later, in November, there was a considerable spike in trading in 3Com Corp. in the days before Hewlett-Packard Co. revealed a bid for it.

A spokesman for SEC declined to comment on the trading in Airgas, as well as any possible investigation into the trades in 3Com.

-By Tennille Tracy, Dow Jones Newswires; 212-416-2183; tennille.tracy@dowjones.com
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