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What if I had sold 79% of the position at 9.31 and just let the 21% run ...

I have read that some of your traders do merger arbitrage, either part of the time or maybe full time. Do they hedge their trades with options. If so, how? Collars on both stocks? Short deep ITM puts and calls? Do they only do cash deals? Wis a good annual return for a merger arb? This a popular...

On IB, can I place an OTO order so that when a short option is assigned it also triggers an at the market sale of the underlying, assuming, of course, it was covered option?

Thanks for the timeless wisdom. I didn't say it had to be risk free. After commission, spreads, slippage, brokers going out of business possibly, there is always risk, beyond the math risk. Still people do merger arbitrage all the time and hedge to reduce not eliminate the risk. It is a...

This really isn't that involved, and the risks are a whole lot less than simply long or short stock, especially now a days.

I just cleaned up the above post, as it was a little prolix. NRAVO

Sport, I'm hardly an options rookie. What I am asking is more of a options-cum-merger arbitrage question, like if I buy 1000 of a stock that's being taken over for a cash price (and short 1000 shares of the acquirer) and there is, say, a 2.8% spread, and the deal won't close for 60 days, and I...

What's the best way to use options to protect a spread in a merger arb? Assuming all cash transaction. Two collars? Seems expensive, awkward? How about two short deep ITM options, a call on the long position, a la hedging a dividend capture, and also one on a put on the short position. Is this...

Thanks much.

Thanks, sport. You answered my question. There goes another strategy.

Let me rephrase: Why would someone, even a MM, buy a ITM call in the pre-market -- something that will when the market opens go ex-dividend and, theoretically, be worth less, along with the stock?

Specifically, what would be the reason for buying a Deep ITM in the pre-market; he would be paying time value, not getting a dividend, what's the logic?

And just a follow up question: Let's say I leg into the trade with the long stock and then the short Deep ITM call. To close it could I sell it as a combo, like closing a buy/write, one trade at a set price. If so, is that kind of combo easy to do with IB?

Let' say I am doing a dividend capture and using a short deep ITM call, two-to-three months out, to hedge my long stock for 61 days (to get the favorable tax treatment on the dividend.) What is the likelihood and reason why my deep ITM call would be assigned early. Could it be bought back in...

Interesting that the IRS would miss this options issue with the dividend tax. Hard to believe, actually.

I have to hold for 61 days right? But what if I am hedged on the underlying stock during those 61 days with a short very deep I-T-M option. Does that change the holding period? Or does the law ignore this?

Anyone know what it's called (I know I am setting myself up here for amateur comedians) when you say, but 1000 of XYZ, it goes up say 10 percent. You sell you original purchase and leave the 10 percent profit on the table to run? Is it an anti-Martingale? Anyone do this?

I think I know the answer to this, but is it possible to arb the spot and futures, at the retail level, no heavy duty computer doing the scanning, using, say, IB? Particularly interested in the AUD/USD.

No joke. I gave up after a year because of the time difference, although you can pick up the final two hours of trading this time of year. I also got hammered on the ASX, and then gave up equities pretty much altogether in favor of Forex. Will be back in the states in a year and resume equity...

I have a spread that will expire on Nov. 8 I believe, a long put @ 1.38 and a short call @ 1.35. Both ITM and will likely stay there for a week or two. Will the CME close these out automatically? Or do I have to manually exercise my long put? I assume the short put would be automatically put...