While TWTR is mighty tempting here from a premium selling standpoint (its IV has gotten somewhat frisky), I've never made a habit of playing "buyout rumors." These can end badly for those who take a position above where the proposed buyout is. Post-buyout announcement, the stock pops/drops to the buyout price and doesn't move significantly thereafter, and you're potentially left holding someone else's bag. My position is that "too bad, so sad" I wasn't holding long before the rumors surfaced, but I'm sure not going to chase price here when it's popped to this degree.
What I am watching for is a potential "buyout rumor failure" play. We've seen how these things have gone before: adrenaline/caffeine/coke-laced crank-out of speculative media reports regarding who the players are, what the buyout should be priced at, yada yada, only to have these stories evaporate into thin air, for negotiations to fail, etc., and the stock price to quickly cave thereafter in a blue, crumpled heap, gasping for air ... .
Lower is generally almost always better ... . The distance to zero is generally less than the distance to infinity as far as price is concerned.
What I am watching for is a potential "buyout rumor failure" play. We've seen how these things have gone before: adrenaline/caffeine/coke-laced crank-out of speculative media reports regarding who the players are, what the buyout should be priced at, yada yada, only to have these stories evaporate into thin air, for negotiations to fail, etc., and the stock price to quickly cave thereafter in a blue, crumpled heap, gasping for air ... .
Lower is generally almost always better ... . The distance to zero is generally less than the distance to infinity as far as price is concerned.
Comment:
And here it is. $GOOG, $DIS withdraw bids. $TWTR off 17% in pre-market. I'm going to watch it a bit to see if I can get decent $$ for selling puts at the $16 strike and below.
Comment:
Oh, wow. More weakness here on rumors that the last bidder -- $CRM -- is out. While the Nov 18th 14 short put is going for .41 ($41)/contract, I may wait a little longer to pull the trigger on something (although I could just do a premium selling setup here with its high implied volatility rank and implied volatility -- 81, 76%, respectively).
Comment:
Nov 25th 14 short puts are going for .48 ($48)/contract credit at the mid. With earnings now 13 days out, holding my breath a little longer for further cave-age. Their earnings have, at best, been "not as bad as expected" the last several quarters.