What do you mean you sold 40 of your long. I thought you are short puts. I think I will roll my calls down to create ATM overwrite.
I meant i sold at 16.40 100sh from my long position (i am long 14.95) The post prior to mine was asking why IB shows ask 16.10 while bid was 16.35
shorting puts is a terrible idea here. we are long a bunch of 20 calls from our 5sigma bucket (this is where we place all the stuff that we expect the value to go to 0). if deal happens - we good. if not - no biggie. overall thinking that the deal will be made but not bullish enoughj to put on a real directional trade. too risky - no edge here
Wait. You think a deal will be made but not at 20. Sp you are long 20 strike calls expecting them to be a zero while the short puts are a bad trade. Good reasoning. I disagree. I think I my risk reward is 1 up 1 down. I make 1 if the possibility of deal exists or deal happens and I lose one of deal idea busted. Assuming deal is at some takeover premium.
Log call 20 can be more rewarding but shorting put has more chance to be profitable. Anyway, Today is a hard proof that you should get into YHOO. There is absolutely no stock in my list that is green except YHOO. YHOO has also pulled back from it AH high but I believe the condition is temporary and once we pass it YHOO is over $17 with no deal news. So in conclusion, a wise trader gets into stocks that are green in red days (not short market ETFs or utilities)
More buying rumoros are hitting the street. deal should come in 2011. We have about 45 days but I expect it happen sooner.