Option Spreads, Credit my Debit Message Board

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Strategies & Market Trends : Option Spreads, Credit my Debit

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To: jjs_ynot who started this subject	12/5/2000 7:09:38 PM
From: Steve_GTS	Read Replies (2) of 2317

Yes there is a merger in the works! Under the terms of the agreement, GelTex shareholders can elect to receive 0.7272 of a share of Genzyme General Division common stock or $47.50 in cash for each GelTex share owned, subject to proration to maintain the cash portion of the total consideration at 50 percent, or approximately $509 million. The Initial Credit is currently $1,087.50 on the $5 Box Spread GELX Closed today at 57 1/8 GENZ Closed today at 92 1/4 I noticed no such arbitrage on GENZ How could this affect the profit / loss under an early exercise or stock re-asignment. This seems to good to be true, and I see no volume on the options indicating the box purchase I have calculated that even on a Ratio Box Spread (ie, buying 2 options for every one sold) still makes money ($757.50 on a $5 spread). Would this be a good safety net?

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