I believe YHOO will be bought soon. This rumor has been very strong and even YHOO has confirmed it that there are multiple potential buyers. Based on that I recommend the following option trade: For January 2012 which gives you 4 months of time so if something happens, you will catch it. You will benefit from a normal market rise too. Sell PUT 14 for Jan 2012 and buy Call 15 for the same month with a credit. So far you have done a risk riversal trade with credit. When YHOO moves up, you can sell Call 20 for Jan 2012 so you will have a naked PUT with a bullish call spread. Even if YHOO stays above 14 by Jan 2012 you will make good money and if a buyout happens and the price for sure will be over $20, you will earn $500 plus the credit that you get for each pair. Margin needed to sell naked PUT 14 is also very low. It will be $250 for a contract so you can do 40 contracts with $10000 and you can make over $20000 in 4 months.