Got Yaho and MSFT Call/Put options - what to do?!

R

rktest05

Hi all,

I'm a newbie to option trading (have been trading options for the last 20 days or so).

Here is my situation.

Last week, I bought

1) 10 contracts of YAHOO June 08, $27.50 strike put at $0.41
2) 10 contracts of YAHOO May 08, $27. 50 strike call at $2.45

3) 10 contracts of MSFT May 08, $28.00 strike put at $0.30
4) 10 contracts of MSFT June 08, $28.00 strike call at $2.20


Now that the Yahoo-Microsoft deal did not go thru, I'm just wondering what is the best
way to sell all the options to get the most amout of profit.

Should i sell all the options on Monday or wait?

I can also consider exercising the options
if need be.

Thanks a bunch for your help.
 
Quote from rktest05:

Hi all,

I'm a newbie to option trading (have been trading options for the last 20 days or so).

Here is my situation.

Last week, I bought

1) 10 contracts of YAHOO June 08, $27.50 strike put at $0.41
2) 10 contracts of YAHOO May 08, $27. 50 strike call at $2.45

3) 10 contracts of MSFT May 08, $28.00 strike put at $0.30
4) 10 contracts of MSFT June 08, $28.00 strike call at $2.20


Now that the Yahoo-Microsoft deal did not go thru, I'm just wondering what is the best
way to sell all the options to get the most amout of profit.

Should i sell all the options on Monday or wait?

I can also consider exercising the options
if need be.

Thanks a bunch for your help.
More...

Sell your profitable legs, or at least take -some- profits, let your unprofitable legs open. There's still potential for 'change of minds' next week.

I myself have a bunch of may and jun msft calls (30 and 32 strike), and have a much smaller yahoo partial strangle/iron condor: long may 25s, short may 20s (on the put side), and long the may 32.5 calls (not covered). long a tad of yhoo stock. I'll be lucky to break even on the yhoo side of the trade, but msft should prove profitable. I will be selling at least half of my microsoft position at open if the move is substantial enough, and will do the same on the put side of the yhoo transaction. If yhoo opens low enough (below 20), i may considering adding a tad to the stock position, but its a small stock position. no use in selling here - the downside from $20 is maybe $5 at most. If in the off chance microsoft came out with an offer at $25 next week, there's still value in yhoo if bought below 20.
 
YHOO's going to tank on monday, MSFT should go up a couple points.

I'd say sell everything.

YHOO implied vol is going to stay high for a while, you can probably get a few cents for that call (but you'll have a good profit on the put), your MSFT call should do well, and your MSFT put is probably going to be worthless.
 
Quote from demoship:
YHOO's going to tank on monday, MSFT should go up a couple points.
More...


LOL....Yahoo won't "tank", it will trade flat. The MSFT news is not bad news.
 
demoship said:

YHOO's going to tank on monday, MSFT should go up a couple points.

I'd say sell everything.

YHOO implied vol is going to stay high for a while, you can probably get a few cents for that call (but you'll have a good profit on the put), your MSFT call should do well, and your MSFT put is probably going to be worthless.
----------------------------

I agree with demoship tho if you sell the MSFT put ASAP you might get about .25 depending on initial MSFT stock action -- this is bad for YHOO (forget forex comment) but not a real + for MSFT
 
Quote from matador04:
My guess is it will hit 22.
More...
Quote from timscott:
cnbc.com already reporting YHOO could open at $20 / share
More...

Not a chance. Yahoo closes in the $30.00 range on May 5, 2008.
 
Quote from forex-forex:

Not a chance. Yahoo closes in the $30.00 range on May 5, 2008.
More...

The stupidity on this message board is unbelievable.

I'm not even going to try to tell you why you're wrong, since I'm hoping you're being intentionally obtuse, and not genuinely stupid.

I also think this IS at least a small + for MSFT. They did drop a few dollars on the day of the bid, due to people thinking they're overpaying for it. Now that people aren't as afraid of MSFT making a ridiculously high bid in desperation to get YHOO, I think the stock will get a bounce of a couple bucks easily.
 
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