Wednesday, 28 October 2015

Playbook Review: 10-28-2015 HOT

Title: Takeover with Cash and Stock.

Strategy Description: Usually the really good opportunity can lie in the acquiror rather than the acquired company. But in this case the acquiror wasn't too liquid. As a result while it is still reasonable to expect some sort of selloff potentially, you probably wouldn't necessarily want to hold it for multi days as a swing trade as it's unlikely to draw the same sort of risk-arb selling.

Try to start in short on a pop on the open, ideally using premarket levels as a guide.. But don't expect too much of a pop. Then as you see selling add, using that high as the stop-loss.
I didn't execute on this one, but it looks like it was somewhat more difficult to execute on give the speed that it dropped out at, but shorting near the opening pop yielded good risk-reward.


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