Dear Victor - this is good advice, but I don't know about the audience. Don't get me wrong, the scenario you ve stated is not uncommon. I can count a few other situations. However, for those who arbitrage BAY based on this rumor should be nimble enough to take care of themselves. Also, from a couple of response, it seems that a few people have used today action to bail. That is a good measure to protect the downside. The rest are really BAY bulls. I mean, while I cannot speak for others and it may be nice for a big fat premium if indeed BAY is in play, I m holding BAY not because of the takeover.
The specialists are here to provide liquidity. So they bet against the rumor. I suppose traders should follow suit. However, IMHO, investors should see pass that. Otherwise, they end up neither bull nor bear and allow other people's emotion to determine their investment strategy. In a way, when BAY was hot, everyone wanted to see the moon. When it was cold, everyone thought the end of the world was near.
Ultimately, yes, the traders should protect themselves. Maybe some of the investors can hedge their holdings with options. Personally, I love bare nuckle investing <vbg>
Btw, I believe 28ish is a huge resistance for BAY. Unless there is some actual development, rumor or otherwise, the specialists will try to defend their option plays [expiry this Fri.]
rgds Bosco |
