grep '-o' ???

[Leslie E. Ballentine]

Here is a strange behavior, which I find using version 2.5.1 of grep.

>address@hidden ~]% cat testfile
>12345
> -o sss
>-o
>
>address@hidden ~]% grep 'o' testfile
> -o sss
>-o
>address@hidden ~]% grep '-o' testfile

At this point, grep hangs indefinitely.
It seems that grep cannot find the string '-o'.
Maybe it is interpreting -o as an option (although I would think that the
single quotes would stop that from happening), but even that does not 
explain the behavior.

Can you explain what is happening?
And how do I search a file for the characters "-o"?

Leslie