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|Subject: interesting arb on DELL bonds / equity||Date: 1/19/2013 12:52 PM|
|Author: altstrat91||Number: 34709 of 35362|
so last night i spoke with a trader that i highly regard. he has a pretty heavy long equity position in DELL (>6 figures) and believes the private buyback/merger is going to happen.
but i almost fell out of my chair when he responded to my question as to if he bought puts or how he had hedged himself? incredibly, he hedged the trade by shorting some DELL bonds.
sure enough i brought up a bunch of DELL corps [[ in particular, the 2012s, 2028s, 2038s, 2040s and low and behold to my astonishment, they are all trading way under par. its been a little bit since i have looked at these DELL corps, but in the past they were trading at huge premiums to par being A rated.
so the bonds have been very recently tanking and as you know i always say, follow the lead of the whale size debt traders as they usually can be pretty insightful on a move like this.
there still might be room here on the equity side to put a trade on with DELL stock still in the $12's. i have further DD to do..........
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