Looking to hold this to Sept, will exit before the deal closes. Will be a risked based decision .
Normally I always always use stops but that does not apply for this trade . Instead I have done this one differently . TWTR is weighted at 9% of my account . My logic is that is that this allows the deal to fall through and if the share price collapses 50% of current value , my loss to AUM will be about 4.5% , this is easy to recover from .
1) My plan here is to sell in sept.
If the deal falls through and price collapses prior to this, I will sell immediately and take the loss , whatever it is .
2) Worst case scenario, but unlikely , I lose 9% of AUM best case scenario, I think this is very improbable and that if the deal falls
though even 4.5% loss to AUM is unlikely and would probably be closer to 2-3% loss of current AUM.
3)The potential gain based on TWTR share price going up 10% is +0.9% profit to current AUM.
4) Max profit potential on the trade is 11.34% but I will be exiting early in sept if all goes well so 10% is just a guess.
Additional consideration would be to play this with options to supercharge the profit potential, but I am not an experienced options trader and decided to use raw shares for my bet .
Normally I always always use stops but that does not apply for this trade . Instead I have done this one differently . TWTR is weighted at 9% of my account . My logic is that is that this allows the deal to fall through and if the share price collapses 50% of current value , my loss to AUM will be about 4.5% , this is easy to recover from .
1) My plan here is to sell in sept.
If the deal falls through and price collapses prior to this, I will sell immediately and take the loss , whatever it is .
2) Worst case scenario, but unlikely , I lose 9% of AUM best case scenario, I think this is very improbable and that if the deal falls
though even 4.5% loss to AUM is unlikely and would probably be closer to 2-3% loss of current AUM.
3)The potential gain based on TWTR share price going up 10% is +0.9% profit to current AUM.
4) Max profit potential on the trade is 11.34% but I will be exiting early in sept if all goes well so 10% is just a guess.
Additional consideration would be to play this with options to supercharge the profit potential, but I am not an experienced options trader and decided to use raw shares for my bet .
Trade closed manually:
Closed this morning after I saw the " buyout on hold news " maybe no more LBO plays for this guy , one more lesson from Mr Market to add to the books . Could go up but gonna pull the yea na yea here and call it a trade ~
艾力克~