Ivx, Teva

[mskl]

Quote from riskarb:

I was using Febs. I haven't looked at Jans. Lemme take a look. I was reading the put as call in my earlier example, mea culpa.

Yup, good arb there, but I can't source any IVX to short. There was a $1.30 reversal in TASR a while ago when the shares were >$90, but I sourced only 800 shares to short, IIRC.

The Feb has a small reversal play. Good luck finding shares.

If you can find shares - don't do this............ (hose job)

 

[rodroy]

Quote from mskl:

the options will settle to whatever non-electing shareholders get after the merger. As soon as the merger goes through (day after shares have to be elected) the stock will fall to $26.

if you are short stock then you will get bought in after the merger at the TEVA share swap - and then the options will settle to the non-electing portion ($26)

I am short in IVX (sell short 31.30). Can I wait for merger and cover on 26$? Will be my profit 5.30 per share? Thanks

 

[mskl]

not that easy. Virtually all the shares will be tendered therefore if you are short after the deadline then chances are (99.9%) you will be bought in at the merger details:

i.e. 50% of the short shares will turn into short .8471 short TEVA shares and 50% $26 per share in cash. (currently equivalent to about $31)

 

[dkw]

I closed for a modest profit. Holding a partially-hedged position after the deal is done would kind of defeat the purpose of a reversal (or conversion).

I think a box would have been better in this situation.

Thanks for the input.

- d