Those that are in the M&A arbitrage game MIGHT consider selling the June 82.5 puts at $.50 to collect an annualized yield of about $1.00, but the risk/reward on that is terrible. It also appears unlikely that the cash deal will be higher, because the June 85 calls are trading for $0.25. One trade that MIGHT make sense, considering the deal, would be to sell the June 85 calls at $0.25, but again, the yield isn't really worth it.
One trade that WOULD make sense, if I was holding already holding shares of BEAM, would be to buy the June 82.5 puts for $0.50 and sell the June 85 puts at $0.25. If the deal goes through the investor would have protection on the downside, and it would be paid for if the deal closed. From an actual M&A arb standpoint, there is no money to be made. Congrats to those that got in before the deal.
OptionsProfits can be followed on Twitter at twitter.com/OptionsProfits
Mark can be followed on Twitter at twitter.com/OptionPit
EXCLUSIVE OFFER: Jim Cramer's Protégé, Dave Peltier, only buys Stocks Under $10 that he thinks could potentially double. See what he's trading today with a 14-day FREE pass.
Select the service that is right for you!COMPARE ALL SERVICES
- $2.5+ million portfolio
- Large-cap and dividend focus
- Intraday trade alerts from Cramer
- Weekly roundups
Access the tool that DOMINATES the Russell 2000 and the S&P 500.
- Buy, hold, or sell recommendations for over 4,300 stocks
- Unlimited research reports on your favorite stocks
- A custom stock screener
- Upgrade/downgrade alerts
- Diversified model portfolio of dividend stocks
- Alerts when market news affect the portfolio
- Bi-weekly updates with exact steps to take - BUY, HOLD, SELL
- Real Money + Doug Kass Plus 15 more Wall Street Pros
- Intraday commentary & news
- Ultra-actionable trading ideas
- 100+ monthly options trading ideas
- Actionable options commentary & news
- Real-time trading community
- Options TV