Rumors circulating with stock traders that E*Trade is seeking to take over Charles Schwab Corporation prompted both an increase in option trading and denials from the San Francisco-based brokerage.

Word of the rumors were first reported Thursday by the New York Post. The paper reported that traders in the Chicago options pits were spreading word of a potential deal Wednesday as volume in Schwab options traded spiked to 25,000 contracts from a typical day's 3,500. The stock also gained nearly five percent.

E*Trade's name may have been linked to a deal because the online broker recently lost out on a bid for Ameritrade. That firm is instead taking over TD Waterhouse. E*Trade was not the only name tied to the rumor.

Analyst Andrew Brooks of T. Rowe Price told Bloomberg that the rumors focused on HSBC Holdings as a possible acquirer of Schwab.

After the story was published the price of Schwab shares spiked, briefly touched $13.80 in morning trading Thursday. The NYSE responded to the trading surge by halting trading in the stock. Schwab officials then tried to nix the rumors, stating that they have no intent to sell the firm.

"We have no interest in selling the company. We remain firmly committed to our independence and believe we serve stockholders best by continuing Schwab's strategy as an independent company," said Charles Schwab, CEO and founder. "We have no interest in selling the company."

When the stock reopened, the stock price fell to previous levels and closed at $12.68. The stock traded lower Friday morning, reaching a low of $12.30. 

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