Don, if we use ETEK as an example, there will be a continuing ebb and flow with respect to the arbitrage spread until such time as the SDLI deal is either approved or disapproved. Any kind of news, either legitimate or manufactured, will prompt an adjustment in the spread. For example, when the DOJ makes a request for more information (I have little doubt such a request will be made), the spread will widen. Conversely, when news of the likelihood the deal will go through is made public, the spread will diminish. Before this thing is over, I believe we will be whipsawed time and time again.
If you believe the deal ultimately will be consummated, you may wish to buy sell JDSU and buy SDLI on the news that supports that result, and sell SDLI and buy JDSU on news that runs contrary to that result. The key to making money on the arb play is timing.
Since the announcement I've already moved trading shares back and forth between JDSU and SDLI a few times, and I will, no doubt, continue the process until there is a final disposition.
Good luck, and good timing.
Tec. |
