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When to sell your "put"

Green Thumb posted on 01/18/08 at 01:23 PM
I'm new to options, but I have experience in stocks and also currency trading. I recently bought a few puts on a group code HET for May and all of a sudden the company announces a sell out to another group and they announced today that they are pulling it off the exchanges and going private. Somehow this was good for my postion and I don't understand why. I'm in going short. The buyer is offering more than current price. It may do the buyout yet this month. Now, what happens if I stay in there and it is no longer traded on the exchanges?
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Posted by Green Thumb on 01/18/08 at 01:23 PM

Tag It | 1 user tagged it: mergers, put, options

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snowman

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snowman
Posted January 19, 2008 (07:59PM)
Options should still trade, but are worthless if buyout occurs. Interesting play, I smell a rat, HIGH premiums. I would sell if you are up, greed can kill you. On the other hand if you are a gambler buy more, because something is not making sense here with the large open interest (puts bought recently). I have looked at a lot of buy out companies and this one is odd. Notice the large spread on the Bid ask for leaps.  Also $4.00 spreads signify that the option guys have stoped taking action. Only it is on the call side. Looks like a done deal, sell.
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