MYG Short

Discussion in 'Trading' started by ssternlight, May 20, 2005.

  1. Anyone able to short MYG this morning. It is trading above the buyout price -- and is unavailable at IB.
  2. That's kinda scary, why not just buy puts? Should be cheap after buyout announcement, right?
  3. Well,

    I'd be long the 15P at $.90, exercise them, and then buy the stock to deliver -- currently at $14.10. So there is no arbitrage there on the May puts. Basically, I'd lose the commissions.

    The June 15P are going for $1.20. So, that's even worse...

    It seems the only option is the $.14 available on the stock...if it were shortable that is.

    Help me out here if I have missed something...


  4. They pay annual dividend of .36. You will most definately get 1/2 until they close this, maybe more.
  5. Ah...! Thanks for explanation.
  6. You could sell 12.5 or 15 strike calls
  7. alanm


    MYG has been hard to borrow for some time.

    Why not buy puts? Because of time decay.

    Don't be certain about the dividends being paid unless they've already been declared. I've seen them suspended once a buyout is announced (MBG did that I think).

    What makes you think that the stock is only worth $14? What if another hostile bid is made (this is the primary reason it's trading higher)?

    M&A arb is not the least bit simple, and rarely riskless for more than the transaction costs.
  8. bdon


    briefing had their floor talk saying traders thought $14 was too low and the shareholders would hold out for more. Then some investment bank analyst said other suitors would probably stay on the side line.

    Its always a game no matter what the news its never cut and dry. The stock actually pushed higher in the afternoon.