This Day On The Street
Continue to site
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here

Options Analysis: JOSB/MW Deal

TheStreet Premium Services

A complimentary preview
of Options-Profits Previews

This content brought to you by TheStreet's OptionsProfits. CLICK HERE FOR A 14-DAY FREE TRIAL.

Richard Collings and Ronald Orol, TheStreet's analysts over at TheDeal, have done extensive research on the Jos. A Banks Clothier (JOSB)/The Men's Wearhouse (MW) deal. Here is Ronald's latest piece and you can find more content on So, let's dive a bit deeper on Options Profits and see how we can potentially play this using options strategies.

Based on the price action of JOSB, it is obvious that the market still believes a JOSB/MW deal is going to get done. If the market believed the deal was going to fall apart JOSB would be trading near its pre-deal price of $40-$45. What is now obvious is that the board of directors of JOSB wants more money than they are being offered.

Based on what is a lot of brinksmanship, I think the JOSB board may want $58-$60 per share in order to get a deal done. That is a nice premium over the current price. If JOSB doesn't get that price range and the deal actually falls apart then this puppy could tank.

Looking at the options are I think there are a lot of plays that make sense. One play I like is an April 1X2 call spread. I would buy the 55 calls and then sell the 60 calls twice against it. As long as the deal price stays below $63.75 and gets done, the trade comes out a winner. If the deal gets done at $55 (which it seems like it won't), or the deal completely falls apart, this trade could lose.

Another interesting trade would be a risk reversal betting that the deal gets done at under $60, or falls apart. One could trade the April 35/60 risk reversal, buying puts and selling calls to collect a small credit. All of these plays fall more on the deal arbitrage side, but make perfect sense for those that understand the two companies and/or are already long shares in one or the other.

OptionsProfits can be followed on Twitter at

Mark can be followed on Twitter at

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.

At the time of publication, Mark Sebastian held no positions in the stocks or issues mentioned.

Check Out Our Best Services for Investors

Action Alerts PLUS

Portfolio Manager Jim Cramer and Director of Research Jack Mohr reveal their investment tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
Quant Ratings

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
Stocks Under $10

David Peltier uncovers low dollar stocks with serious upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
14-Days Free
Only $9.95
14-Days Free
Dividend Stock Advisor

David Peltier identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Updates with exact steps to take - BUY, HOLD, SELL
Trifecta Stocks

Every recommendation goes through 3 layers of intense scrutiny—quantitative, fundamental and technical analysis—to maximize profit potential and minimize risk.

Product Features:
  • Model Portfolio
  • Intra Day Trade alerts
  • Access to Quant Ratings
Real Money

More than 30 investing pros with skin in the game give you actionable insight and investment ideas.

Product Features:
  • Access to Jim Cramer's daily blog
  • Intraday commentary and news
  • Real-time trading forums
Only $49.95
14-Days Free
14-Days Free
Top Rated Stocks Top Rated Funds Top Rated ETFs