Bosco,
Thanks for the quick response! You are correct, I could have gone to Edgar-Online, etc., but I thought I might get a quick thumbnail here (along with some good advice), and you came through. Thanks again!
I know what you mean about hedging risk. I'm wary of a lot of such opportunities, but when I like them, I invest. For example, I think the CIEN/TLAB arbitrage is an excellent opportunity (and still offers about 1 1/2 points). Look for this deal to close in August/September.
Even combined, there is talk now of CSCO buying the combo (which adds nothing to the gain, but protects the likelihood of it occurring). Further, there is a slim, slim chance that someone might offer more for CIEN than TLAB, which would be an unexpected gain. Any investment has risk, of course.
In addition to the CIEN/TLAB play, I write monthly out of the money naked puts on CIEN. Theory being that it gives triple protection: (1) If the puts get assigned (i.e., I get CIEN), then I essentially bought it at a discount, (2) the out of the money premium offers some buffer and (3) the CIEN/TLAB spread offers a third layer of protection (i.e., if the stock gets assigned, it still should move up to the level of TLAB in time (or down with TLAB but with a diminishing spread).
Anyway, thanks again for your rapid and thoughtful response!
Gary Korn |
