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Non-Tech : E*Trade (NYSE:ET)

ET 16.49

-0.1%

Nov 24 3:59 PM EST

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To: rick cassar who wrote (6705)	6/2/1999 9:20:00 AM
From: Eman03	Read Replies (2) of 13953

Hi Rick, What you are describing is an arbitrage play. You are claiming the risk premium between the current value of the companies and their announced takeover value. That risk premium (in your example $600)is yours to keep provided that the deal goes through. The risker the deal (example when Microsoft tried to buy Intuit several years back, it fell through due to anti-trust concerns), the higher the premium. Telebank shot up yesterday on the news. What do you think would happen if there was an announcement that the deal fell through. There's your downside risk Many people do what you described, I saw a lot of it happening when Lucent announced they would buy Ascend. As the closing date approaches and hurdles are overcome, the risk premium decreases. Good luck, and let us know what you decide to do. Evan

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