How can a pre-merger SPAC trade over $20?

Discussion in 'Stocks' started by blueraincap, Feb 14, 2021.

  1. Sig

    Sig

    Sounds like you're already taking this to heart, but don't forget the old advice that the market can remain irrational far longer than you and I can remain solvent!
     
    #21     Feb 16, 2021
  2. Also shorted STPK albeit a smaller size. After some reading and thinking, the whole SPAC structure seems to benefit the sponsors, IPO subscribers, and PIPE investors, odds are stacked against the secondary investors, I am happy to bet some money against the structural disadvantage. It is a bubble with structural problems and a deal-led timeline built-in.
     
    #22     Feb 16, 2021
    yc47ib likes this.
  3. Sig

    Sig

    I would tend to agree with you, might do a little of that myself. Another thing to think about is that this play is an indirect bet on VIX, as deal flow usually dries up when there is a lot of market volatility. So maybe you could even short some VIX and take advantage of the decaying term structure there in order to hedge the continued irrationality of the SPACs.
     
    #23     Feb 16, 2021
  4. There is an academic paper by some prof (more on law side) that documents how SPACs lose values post-deSPAC. It is not that I trade based on what those dudes say, but its contents mostly confirm my disbelief about the structure.
     
    #24     Feb 16, 2021