Theory on the upcoming announcement Merger and… Arbitrage?
Edit: had to retype this hella times because apparently I’m regarded
Check out this snippet on Risk and Merger Arbitage:
To offset some of the risk, arbitrageurs mix up traditional moves, sometimes shorting acquisition targets and going long the acquirer, then selling calls on the target’s shares. If the merger falls apart and the price falls, the seller profits from the price paid for the call; if the merger closes successfully, the call reflects much of the difference between the current price and the closing price.
Does that sound familiar?
Even if a merger is announced tomorrow, there could be around 4 months before the deal goes through allowing for continued market validity, as separate tickers. Technically, we could be on the brink of a double moon!
Maybe wen lambo is Christmas this year, maybe I’m back to eating ramen. Maybe I’ll need a diaper if this shit goes down – Either way after reviewing the moves and realizing there’s no turning back, I am bullish AF.
Submitted August 31, 2022 at 05:03AM by Dirtyasianguy
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