Sneaky, aren't you? -g- As I thought and thought and thought, it seems likely that the deal will not have huge premium. Not because it make any fundamental sense, but because I had a huge position as of yesterday's close. -g-
Here are some numbers you may want to consider for June, July 50 strike calls. [BTW, 2001 LEAPS for 50 don't make much sense to me unless of course you want to go long on JNJ. Deep ITM LEAPs, OTOH, make a lot of sense, though. And, I have 35s for 2000, FWIW.]
If CNTO was offered $5 bil - all in stock, the take over price would be 61. If JNJ slips 5% CNTO will be approximately at 58. COnsidering contingencies and arbitrage slippage, you can get 57 for your shares or $7 for 50 strike price calls. Possibly this is the best case scenario. The worst case scenario: ~53/share (guess work) and with the slippage and all June 50/July 50 calls will be merely worthless. So, any price below 53 will be bad for your 50 strike calls. IMO.
Here is what I did - I let go some of my greed. Cashed in 3/4 of all my June and July 50 calls for about 50% profit. Now that I took one hurdle out, who knows, the deal may be bigger than $5 bil. |
