The biggest eyewear firm in the world makes thousands of house brand and designer frames in Italy and China and sells them around the globe. Know who it is? Read on.

Luxottica Group (NYSE: LUX) designs, manufactures, distributes and markets prescription eyeglass frames and sunglasses. The Manufacturing and Wholesale Distribution segment makes house brands, such as Ray-Ban, Persol and Vogue. It also provides designer lines, such as Chanel, Prada and Versace. The Retail Distribution segment runs a network of some 5,800 outlets, selling frames, sunglasses, watches and accessories. The stores are distributed throughout North America, Asia and Europe. The firm operates LensCrafters and Pearl Vision, the two leading North American retail optical chains, and Sunglass Hut, the leading North American sun specialty retailer.

This morning, the world's largest eyewear maker, Luxottica Group SpA (NYSE: LUX), announced it would acquire U.S. sunglasses maker Oakley Inc (NYSE: OO) in an all-cash deal for around $2.1 billion, or $29.30 per share.

In what could be a "win-win situation for both companies," in the words of analysts at Morgan Keegan, Luxottica said the combination could offer an opportunity to create new eyewear categories and "enhanced economies of scale." Indeed, an Oakley acquisition should complement Luxottica, which owns the RayBan, Chanel, Prada and Versace lines, and help it transition into the sporting goods sector. Conversely, Oakley, which has been cutting back on its other lines that include footwear and apparel to focus more on its eyewear offerings, should fit Luxottica like a glove.

UBS analyst Laura Leonardelli believes an acquisition of Oakley would increase Lux's sales by around 12% in 2008. Additionally, it would allow Luxottica to further solidify its presence in the U.S. and other markets.

After the announcement, shares of Oakley were up 12% and Luxottica traded around 8% higher, signalling that investors agreed this was a good deal for all involved. The deal has been approved by both company boards and is expected to be finalized in the second half of 2007.

Netflix Inc (NASDAQ: NFLX)

Amazing. Amazon.com Inc (NASDAQ: AMZN), that big online retailer, sees the flix for the net. The shares keep rising for the online DVD rental company-up about 15%, highest since January-- even if their discs do come a little scratched. More than that though is while new subscribers are coming on; it's not exactly going gangbusters. Still, 6.8M is a whole lot of subscribers. Will Amazon, or someone else, overpay?

Rackable Systems Inc (NASDAQ: RACK)

Which came first: The ongoing takeover rumors or the higher stock price? Or was it that Dell Inc (NASDAQ: DELL) is said to be after Rackable, a provider of servers and storage products for high density data center deployments. Rack it up.

Feldman Mall Properties Inc (NYSE: FMP)

Word is that this real estate investment trust will look for a sale, combo or merger. They said the venerable firm of Friedman, Billings, Ramsey & Co. will help them "explore strategic alternatives." Then the stock went up.

STILL FLYING AROUND

Trump Entertainment Resorts Inc (NASDAQ: TRMP)

Dennis Gomes, whose name surfaced in March, is a one time gaming exec and regulator. He's signed a confidentiality agreement to have a look see at the firm's Atlantic City casinos. Separately, Las Vegas' Boyd Gaming Corporation (NYSE: BYD) has also been mentioned as a possible contender.

YRC Worldwide Inc (NASDAQ: YRCW)

The CEO of this Kansas-based transportation service provider has been quoted as saying that a takeover is possible. An LBO is likely. This week the shares have actively been trading up.

Dollar Tree Stores Inc (NASDAQ: DLTR)

Imagine a dollar tree where the stock keeps going up, up, up. Well, here it is, once again, a subject of takeover talk.

BUZZ

United States Steel Corporation (NYSE: X): Russia's Severstal may be prowling around...Plains Exploration & Production Company (NYSE: PXP): Takeover candidate's stock is sharply higher... Micron Technology Inc (NYSE: MU): Blackstone has interest...Ameristar Casinos Inc (NASDAQ: ASCA): A hot stock and takeover rumors abound...Nvidia Corporation (NASDAQ: NVDA): Remains an LBO candidate...The First Marblehead Corporation (NYSE: FMD): The student loan business is booming and earnings growth is strong, but who would buy it?...Marriott International Inc (NYSE: MAR): A target? But where's the movement?...Oakley Inc (NYSE: OO) as a target has been around and around, and now some say it will be bought by Luxottica Group (NYSE: LUX).

Netflix Inc. (NASDAQ: NFLX) -- call volume aggressive on takeover speculation.
NFLX, a provider of DVD movie rentals, is recently up $0.34 to $21.70. NFLX was frequently mentioned as an M&A candidate in 2006. NFLX call option volume of 10,988 contracts compares to put volume of 290 contracts. NFLX June 22.5 calls are bid .55 cents above its theoretical value of .26 cents. NFLX July option implied volatility of 38 is near its 26-week average according to Track Data, suggesting non-directional price risk.

Oakley Inc. (NYSE: OO) -- volatility suggests catalysts as OO trades near 68-month high.
OO is recently at $25.01. Morgan Keegan says: "Last week an Italian daily, la Repubblica, reported Luxottica Group (NYSE: LUX) could acquire OO. Last night, OO amended its 1Q:04 severance agreement accelerating vesting on a change in control. Further, covered employees will now be paid out 100% of the pro rated amount rather than 50%. This is usually a tell-tale sign that a company is at least exploring a sale. We point out Jim Jannard owns 64.1% of the share outstanding." OO July option implied volatility of 37 is above its 26-week average of 33 according to Track Data, suggesting non-directional price fluctuations.

Option volume leaders today are: Oracle (NASDAQ: ORCL), Apple (NASDAQ: AAPL), Google (NASDAQ: GOOG) and General Motors (NYSE: GM).

Daily Option Update is provided by Stock Options Specialist Paul Foster of theflyonthewall.com.