Option volume has ramped up today on KeyCorp (KEY), with activity rising well beyond the usual level on both the call and put side of the tape. Taking a closer look at some of the major block trades on this regional banking issue, it appears that a single spread strategist is responsible for a healthy portion of this option volume.

Specifically, the trader purchased a block of 10,000 June 10 calls for $0.50 each, and simultaneously sold 10,000 June 8 puts for $0.25 each. The result was a net debit of $0.25 per pair of contracts -- which means the speculator can begin collecting profits on those purchased calls if KEY rallies beyond $10.25 by June expiration.

Rumors have been circulating for almost a month about Borders' (BGP) possible bankruptcy filing. People familiar with the situation told The Wall Street Journal that the filing could come as early as the middle of this month.

Borders has been trying to hold off the filing by delaying payments to vendors. But this is only temporary. Now the matter has reached a critical stage. The company has obtained about $500 million to $550 million in debtor in possession financing that would keep the company operating after a court filing.

Boeing (BA - option chain) stock is trading lower today on conflicting reports about the company's timeline for the debut of its highly-anticipated, but much-delayed 787 Dreamliner. Aviation Week published a report late Friday that the company has told several customers that delivery of its 787 Dreamliner will be delayed by up to 10 months, but Boeing denies this report, saying it intends to meet the current delivery date of Q1 2011. If you think this stock won't be rising too far in the coming months, then it could be a good time to look at a bearish hedged play on BA.

On the final trading session before Christmas, Apple, Inc. (AAPL) shares hit an all-time high thanks to a published report hinting that another product announcement may be rolling in. On December 23, the Financial Times reported on its Tech Blog that Apple "has something big up its sleeve for next month."

The main reason for this speculation is that the tech company has booked a stage at the Yerba Buena Center for the Arts (YBCA) in San Francisco for "several days in late January." Apple has used this venue to make major announcements in the past, and the speculation is that Apple is going to make a major product announcement at the end of January. The blog quoted Piper Jaffray analyst Gene Munster as saying, "We believe there is a 75 per cent likelihood that Apple will have an event in January and a 50 per cent chance that it will be held to launch the Apple Tablet."

Haven't had enough Tiger Woods news lately? Are you absolutely obsessed with the comings and goings of Alex Rodriguez, Derek Jeter and their respective love lives? Well, the newest entrant into the world of sports reporting may keep you up to date on just that, and more. TMZ has become a major name in the world of celebrity news, and is now expanding its reach into the world of sports.

The main reason for this move is that TMZ will no longer be tied to AOL (AOL), which should make it easier for Harvey Levin to introduce a sports-related Internet site. The celeb happenings of the past year have helped to cement the validity of TMZ, but advertising sales are on pace to come in $10 million shy of a year ago. TMZ itself has evolved from a scoffed-at website that paid for tips and hints to major news stories to an "effective news-gathering operation of a certain kind" according to Time Warner (TWX). TMZ came into its own this year, with the site's popularity exploding thanks to its report that Michael Jackson passed, which came in an hour before the "most mainstream news organizations."

The SEC is trying to stop Wall Street players from spreading rumors that sink stocks, as I posted yesterday. The reason such rumors matter is because there are many companies that are unable to defend themselves from rumors. Bear Stearns comes to mind as an example. I think if someone tried to spread a rumor that Goldman Sachs Group (NYSE: GS) or Berkshire Hathaway Inc. (NYSE: BRK.A) were heading for bankruptcy, the rumor would not get foo far.

But if a company lacks such a strong reputation, its CEO needs to be prepared to respond effectively to such rumors. And I really don't think it should be difficult to mount an effective defense. In my mind, the CEO should be able to provide credible answers to two questions:

• Cash flow. How large are the company's short- and medium-term liabilities and how many times do the market value of its short- and medium-term assets cover these liabilities?
• Debt default. What are the company's key loan terms and what specific assurance can the company provide that it is in compliance with these terms?

MGL Asset Management Group's press release purporting to offer $7.25 per share for Krispy Kreme Doughnuts (NYSE: KKD) was pretty quickly debunked as illegitimate and, very probably, an effort to hype the stock for a quick buck. Jon Ogg reported on the mysterious offer on our sister site, BloggingBuyouts.

The stock jumped on the news of the offer, but quickly gave up all the gains and then some after media and analyst reports dismissed the offer. But anyone who jumped on the stock at the sight of the press release got burned.

How can you prevent this from happening to you? A good rule of thumb: When you're looking for information on material developments, look to the SEC filings. The offer was made solely through a press release -- something that anyone with a few hundred bucks to pay the wire fee could send into the hands of millions of investors in a few minutes. Until you see something about the "offer" in the SEC's Edgar Database, it should be regarded as a rumor. I wrote about a similarly non-materializing offer at Trans World Entertainment (NASDAQ: TWMC) back in November.

Another solution is to leave the "in-play" trading to the pros -- it's all about information and you're unlikely to have an edge. If you see a news item that a company has received an offer, don't jump in.