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Revisting the $MSFT $ATVI trade
On Sunday, for paid subs you got my thoughts on the $MSFT / $ATVI deal

I was bullish (still am) on it going through and provided a trade structure with a PUT hedge

Considered $77.50 strike, $1.75 premium @ 7/21 exp for imp vol gain

As of this morn, premium now $2.25 (Bid)

Granted I said that Cedar Grove Capital's long position in $ATVI was at a much lower cost than when the CMA announced it didn't have a problem anymore with Call of Duty last month and that needed to be taken into consideration when structuring the trade

However, assuming net exposure @ ~0 with the same L-commons + PUT contract structure ATVI. Math works out below

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M&A Arb: Microsoft / Activision Deal Part II
Recaping the issues, rebuttals, and trade that CGC currently has going on
M&A Arb: Microsoft / Activision Deal Part II

Joshua Simka's avatar
Joshua Simka
@tomatoApril 28
What are your max potential return and max potential loss with this trade?
Paul Cerro's avatar
Paul Cerro
@paulcerroApril 28Author
@tomato goal is not to hold the contracts. Need to capitalize on imp vol when it happened and the you're set long for shares. Even with this trade, you're still up a ton
Rihard Jarc's avatar
Rihard Jarc
@rihardjarcApril 28
$MSFT probably better of without the deal at this price. Still the $ATVI IP is very nice.
Paul Cerro's avatar
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