What do you guys think about YHOO? I personally think it's going to float around the mid to high 20s until the shareholder meeting. Shorting June volatility seems like a good play right now. I got a fill today on 2 contracts of the 27 1/2 calls @ 1.7, so nothing big. I think YHOO will close on Friday very close to 27.5, due to option pins, and there's potential for a big (1 - 2 points) drop next Monday. At that point, I'd try to get a fill on a 22 1/2 or 25 put, and hold the short strangle till expiration. My rationale: There's enough optimism and people who think MSFT will come back w/ an offer to keep the stock high. Icahn and other large shareholders who support him are trying to take over the board, this will also keep the stock high. YHOO traded in the mid to high 20s BEFORE the deal was called off, it's unlikely they'll trade higher then the 28 - 30 range until the shareholder meeting happens. It's unlikely MSFT is going to come back w/ an offer before the shareholder meeting (Which is July 3 by the way). Even if they do, it's unlikely they'll go higher then 33, since 31 already angered many of their shareholders. So there's some limit to the upside. It's unlikely YHOO will come out with great news on ad revenues or what not. They were underperforming before the offer, now that employees are distracted by the MSFT-YHOO shitshow, they're getting LESS done, not more. Any MSFT-YHOO deal will face regulatory scrutinization and will take months at minimum to complete. They will likely trade 1 - 2 points below the offer for a while. Assuming you short a 27.5 call for 1.5, and a deal is reached @ 35 / share. The stock will likely trade around 33 when it's announced, and you can get out at a loss of 4 / share. Given that a deal being completed in the next month is highly unlikely, I'm willing to take this risk. It's unlikely another bidder will emerge with such attractive terms, or one that can outbid MSFT. -- Would I outright short the stock? No. Would I sell July volatility? Hell no. But at this point, I think selling June volatility is a good play, as it's unlikely anything significant will happen until the shareholder meeting. All material news events have been released. There's a slate of nominees for the board, BIG institutional support for it, and the date's been set for the annual meeting.