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Motley Fool Global Gains / GGS: Yongye International


Subject:  Re: 30% discount to privatization Date:  11/16/2012  12:58 PM
Author:  mekong22 Number:  3526 of 4235

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 offer
3) (conspiracy theory alert part deux) someone has insider info about a problem/hiccup with the deal

Although 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.
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