(Bloomberg) — Lamb Weston Holdings Inc. shares rose after Reuters reported that Post Holdings Inc. is working with bankers to explore a possible transaction with the french-fry maker.

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Shares of Lamb Weston climbed as much as 9.1%, their biggest gain in almost two months. The stock has fallen 26% this year. Post fell as much as 4.8%, its largest intraday drop since October 2023.

Hours earlier, traders snapped up unusually large volumes of bullish call options expiring in January that would allow the holders to buy shares in the mid to upper $70s. After the stock surged as high as $81, the traders were sitting on a paper gain of as much as $2 million.

The deliberations come as Lamb Weston faces pressure from activist investor Jana Partners to explore strategic alternatives. Jana in October disclosed it had built a 5% stake in the company, citing “self-inflected missteps that have led to underperformance for shareholders,” according to a filing at the time.

Post earlier considered buying Lamb Weston in 2015, when the latter company was part of Conagra, Reuters reported.

Post and Lamb Weston didn’t immediately respond to requests for comment.

—With assistance from Jeannette Neumann and David Marino.

(Updates with options trades in third paragraph.)

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