Is it insider trading or luck?

One way to find great trading ideas is to look to the options market and try to figure out where the big money bets are being put. When you see people making huge bets and buying blocks of calls in the 1,000s vs prior open interest in the sub-100's, it usually can mean that someone is either really confident or has some sort of inside information. Here are two recent examples:

Coinstar (CSTR):

On 2/14/11 somebody bought 5,071 Feb 42.5 option straddles for around $2.83 per straddle. A straddle is the simultaneous purchase of the call and put in the same strike and same month. The buyer is betting on a large move in either direction. These options expire worthless on Friday. (technically Saturday, but markets are closed)

On 2/17/11, Redbox announces they are going to launch a streaming business to compete against netflix. The stock shoots up >7% after-hours. Tomorrow morning those straddles will be worth between 4-5 dollars per straddle.

Weight Waters (WTW)

2/14/11: A block of 4,273 Feb $45 calls were bought for .95. Stock was trading at $44/share.

2/17/11: Earnings are announced. The stock shoots up $20 or 45%. The calls that were selling for .95 are now selling for $20.21 or a gain of roughly $8 million dollars depending on when they were closed out. All in the matter of 4 days.

Makes me think some people are trading on non-public information! Or they are just extremely lucky!