Premium Post: An Options Strategy To Capture The Mellanox Technologies Spread

There are many ways to skin the merger arbitrage cat and I have used or have considered using four of these methods in the past including,

1. Buying the stock of the target company

2. Buying the stock and adding a protective put option for a deal where the spread is large and the risks are high

3. Buying call options to maximize returns but taking on timing risk

4. Selling naked put options that expire near the expected closing date and are at a strike price close to what the acquiring company is willing to pay

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