NEW YORK (Reuters) - Hillshire Brands Co (>> Hillshire Brands Co) saw a spike in bullish options bets in the days prior to a Tuesday takeover offer from Pilgrim's Pride Corp (>> Pilgrim's Pride Corporation), even as the company was in the midst of a big acquisition of its own that had hurt its share price.

Hillshire Brands shares jumped nearly 23 percent to an all-time high on Tuesday after Pilgrim's Pride offered to buy the Chicago-based packaged food company in an all-cash deal valued at $6.4 billion.

As the stock rallied to an all-time high, some noticeably bullish bets made in the options market in the past several days are set to realize big profits.

On May 12, Hillshire announced a $4 billion purchase of Pinnacle Foods (>> Pinnacle Foods Inc), producer of Birds Eye frozen vegetables and Vlasic pickles.

The next day, 25,000 June $40 calls were bought at 48 cents apiece.

The bullish bet is now raising eyebrows because Hillshire shares had lost about 2 percent between the deal announcement and Friday's close.

After the Pilgrim's deal was announced and Hillshire shares jumped 23 percent to $45.51 on Tuesday, the premium on those calls also spiked to $5, for a potential profit of $11 million.

Pinnacle, meanwhile, saw an uptick in bearish bets following the deal announcement. It is hard to determine what motivated those bids, as they could have merely been placed as a hedge.

Call open interest in Hillshire Brands jumped from 18,000 to 175,000 contracts in the past 10 sessions, while put open interest quadrupled to 60,000 contracts during the same period, Trade Alert data showed.

"Friday was especially busy for option traders since on that day there was 19.4 times more calls traded than the average over the past six months," said Rocky white, senior quantitative analyst at Schaeffer's Investment Research in Cincinnati, Ohio.

A merger between Pilgrim's, the world's second-largest chicken processor, would seem to put the Pinnacle deal in peril.

There was a notable increase in put-option open interest in Pinnacle in the days following the deal announcement. About 750 new put positions expiring in September at a $32.50 strike price were opened on May 12 and 13. Overall, put volume on May 12 soared to 1,311 contracts versus an average of just three contracts in the previous five sessions.

Similarly, more than 200 $32.50 put options were bought that expire in late June. With Pinnacle shares falling 5.4 percent on Tuesday, those bets are now profitable, or "in the money."

BIG BETS ON HILLSHIRE

At least two large blocks of Hillshire calls traded on Friday - 2,515 contracts of June $43 calls and 1,500 contracts of Oct $43 calls, according to Thomson Reuters data.

The October calls traded at about 65 cents a contract on Friday, but were changing hands at about $3 each on Tuesday for a potential profit of about $350,000.

Part of the June $43 calls in Hillshire traded on Friday was used as a three-legged trade, a strategy that is often used when a trader is trying to hedge a bullish position in a stock. An options trader on Friday made three transactions - bought June $38 calls and sold June $43 calls, and sold $35 puts.

"Did the trader know something in advance? I don't know, but they were definitely positioning for the stock price to go higher, and it has done just that today," said Caitlin Duffy, equity options analyst at Interactive Brokers Group in Greenwich, Connecticut.

(Reporting by Angela Moon; Editing by Lisa Shumaker)

By Angela Moon