Unusual options activity pegged to the shares of Harrah's Entertainment Inc. ahead of the announcement of a buyout offer for the gambling operator is raising eyebrows among some market options players.

Harrah's Entertainment, the world's biggest casino operator, on Monday said it had received a $15 billion buyout offer from private equity firms Apollo Management and Texas Pacific Group , sending its shares higher.

But last week, there was already unconfirmed chatter across options trading desks regarding a leverage buyout on Harrah's, said Paul Foster, options strategist at financial-information Web site theflyonthewall.com in Chicago.

Jon Najarian, co-founder of Web information site insideoptions.com in Chicago also saw unusual call activity in Harrah's in the days preceding news of a possible deal.

We suspect that someone had insider knowledge of a possible takeout of Harrah's Entertainment before the news, he said.

Investors often buy calls hoping to profit from a rise in the stock. And when they speculate on a possible takeover, they typically turn to calls with strike prices above the current stock price because they can put the least amount of money at risk and realize the highest return if the acquisition does occur.

As early as September 20, Najarian noticed that some traders focused on Harrah's October 70 call options giving them the right to buy, what is now a $74.71 stock, for $70.

About 9,700 options in total traded in Harrah's on that day, far above its average daily volume of approximately 3,400 contracts. A large amount of that volume consisted of call options.

We had no idea what was the catalyst was for this unusual options activity, Najarian said.

Harrah's shares were trading at $66 on September 20 and those October 70 calls were then out-of-the-money.

On September 26, 27 and 28, Najarian's computer model also showed a spike in call activity, suggesting the catalyst was a possible a takeover or a brokerage upgrade, Najarian said.

During those sessions, more than 20,000 contracts traded on a daily basis, Track Data figures showed.

The U.S. Securities and Exchange Commission could not be reached for comment

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