ALR

O

oldnemesis

http://finance.yahoo.com/news/abbott-labs-boost-diagnostics-business-212309631.html

ALR shareholders will get $56.

http://finance.yahoo.com/echarts?s=ALR+Interactive#{"range":"2y","allowChartStacking":true}

Trade:
With ALR at 53.90
Aug 55/50 bull put spread for a net credit of $65
Yield = 65/435 = 14.9% in 6 months or 30% annualized
Prob and Expectation are irrelevant.

I believe this is not a complex acquisition and will easily complete in the six months... but it needs to be watched with the time limit in mind. Usually in such acquisitions I do spreads further out to avoid the risk of a possible delay but the Aug put is the furthest out available.
 
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Well...I'm having a few disasters lately.

http://seekingalpha.com/news/317424...t-chiefs-non-committal-comments-earnings-call

First the Pfizer: Allergan merger was called off when the Treasury imposed new rules to discourage inversions, now we have a panic that Abbott might call off the acquisition of Alere.

The Pfizer/Allergan incident was particularly painful because the treasury had said specifically that it was beyond their authority to take action against the Pfizer inversion. And then they did exactly that.

Now Alere has been in trouble because of a failure to file required SEC papers and has been shuffling management. You would think this wouldn't be a problem because there is in place an agreement that Abbott would acquire Alere for $56.

BUT this am on an earnings call the Abbott Chairman passed on owning the transaction. What's the effect on ALR?

http://stockcharts.com/h-sc/ui?s=ALR

C'est la guerre

http://www.ebaumsworld.com/videos/tom-and-jerry-the-two-mouseketeers-1952/82318300/
 
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Good to see you updating your threads. I think that's about 3 (perhaps there might be more) that have gone to maximum loss. IBM, AGN, ALR.


IMO ...... Looks like the average risk:reward ratio is about 10:1, I think that's too high. So I would reduce that to 5:1 by selling Iron Condors or selling Credit Spreads with strikes closer to the underlying.





:)
 
Well, as I explained before, you have to leave IBM out of that list.

As for Iron Condors I do like them sometimes, but you not only double your credit you also double the probability of exceeding the spread on one side which will not be completely compensated on the other side.

I only do Iron Condors when I am equally confident on both sides of the trade... which is rare. I currently have an Iron Condor open on ORCL.

As for selling closer in: you not only change the risk/reward but you also change the probability. You have to look at the whole picture : premium and probability and that is why I always look at the expectation which takes both into account.

I am a little bothered by the two cases coming so close together but I don't think it represents an essential change in the market.

Whenever it rains you wish you had an umbrella, but unless you live in London you don't carry one around with you all the time. Where I live right now (Myrtle Beach) you couldn't buy an umbrella if you wanted to.


http://www.google.com/url?sa=t&rct=j&q=&esrc=s&source=video&cd=2&cad=rja&uact=8&ved=0ahUKEwiV3p32gZ7MAhXF6SYKHfKMD5cQtwIIKTAB&url=http://www.earthcam.com/usa/southcarolina/myrtlebeach/&usg=AFQjCNEQM3o65JUgmZVPGW-LwDWUC41a_Q&bvm=bv.119745492,d.eWE

http://www.earthcam.com/world/england/london/abbeyroad/?cam=abbeyroad_uk

(the last two are live)


:)
 
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