at today's close. Potential nice return assuming the deal closes in the next 12 months or (probably) less.
And assuming no bump in the offer price. I think some small increase is likely. I've bought some April 20, 2013 options at a $4 strike. When the next round of options (June or July?) opens up, I'll buy those at the same strike if I can. I figure if the deal blows up, I can at least exercise some of the calls at a good buy-in price. But given the players in the deal, all of whom are serious players and have substantial contacts and resources, I have no doubt this deal will go through. The timing is tricky, but I believe they are trying to make earnings look low to support their low-ball buyout offer, and they can only do that so long without getting caught. Their strategy works best if the deal concludes before their next audit, which will start in early February. It would be ideal for them if they never have to file an annual report again. So while these deals often take a year, this one could be quicker.
When the next round of options (June or July?) opens up ... kidchicago2,FYI, the July options open up on Monday.as always, i am full of carp... also looking for some cheap ones, now just holding a pair of old Jan 4.50 calls ...
It's been pretty crazy. In my mind the possibilities are:1) someone with a big stake needs to liquidate their YONG holdings as the funds are urgently needed for another use and can't wait to see how the deal finalizes. Potentially some kind of tax strategy too before new rates kick in next year?2) (conspiracy theory alert) Someone connected to the deal wants the price to be low so it encourages the special committee to accept the offer3) (conspiracy theory alert part deux) someone has insider info about a problem/hiccup with the dealAlthough I thought I swore off YONG options long ago, the price action these past few days has really perked me up. In addition to the Jan '12 $6 gamble I described in yesterday's post, I've also snatched up some April '12 $4 and $5 calls as well now. The $4 Aprils going for $1.10 means that I could more than double my money in a few months IF the deal closes or comes close to closing in the next six months. The $5 ones at 55 cents would have me tripling my money in a few months. I couldn't resist. Even if the deal doesn't close but an offer is accepted at $6.60, you profit nicely. A higher offer price would really create some spectacular quick profits.Of course nothing is guaranteed. The deal could drag on or it could not be accepted, in which case you would be much better off with long shares than call options.
Kid, I'm with you today on the April 4s and just bought some today. I think there is a strong likelihood that we will get a pretty good pop after the Special Committee approves the go-private offer. As the stock goes down, they will have more justification to accept the offer. Also it leaves the door open to arbitragers who could buy in around this price just for the quick 35% gain. They may vote yes on the buyout if they just want the arbitrage.This stock dip is pretty typical in the RTO go-private deals. The stock pops after the announcement and then lingers for a while, slowly drifting down. Then once the Special Committee accepts the offer, the stock moves closer to the go-private offer. CMM had a pop, but WWIN’s was a little more gradual. See http://boards.fool.com/i-talked-a-little-bit-about-cmm-but-h...
1) someone with a big stake needs to liquidate their YONG holdings as the funds are urgently needed for another use and can't wait to see how the deal finalizes. Potentially some kind of tax strategy too before new rates kick in next year?2) (conspiracy theory alert) Someone connected to the deal wants the price to be low so it encourages the special committee to accept the offer3) (conspiracy theory alert part deux) someone has insider info about a problem/hiccup with the deala fourth option I should have thought of is that someone with a large short position wanted to walk the price down so that they could cover a bit more of their position before any offer gets accepted.
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