Friday, May 04, 2007

Another Buyout?

The New York Post is reporting that Microsoft is upping the ante a bit by asking Yahoo! (YHOO) to enter formal talks to be acquired. I think the acquisition makes a lot of sense. I can't say for sure what price would be fair, but according to the paper, Wall Street sources are estimating a $50B price tag. This would translate to roughly $37 a share.


The Travelin' Man said...

I am pretty psyched about the move in YHOO today, though I am skeptical that a buyout will occur (clearly, I am in the minority). I wrote the May 35 just now for .75, and am happy with that. I really thought about doing the May 32.50 for $1.60, but I think that there is a good chance that I will get almost the $1.60 over two months by writing back-to-back $35 calls.

For today, though...


Brute Force said...

I actually contemplated selling the May 35's as well. Woulda, coulda, shoulda. YHOO gave up about half of today's gains after reports that talks between Microsoft and Yahoo! were not ongoing.

I guess we'll see how the stock reacts next week. At least I'm no longer underwater... my cost basis is 29.50.

The Travelin' Man said...

Yeah - now I am a little bummed that I didn't sell the $32.50 call and take the bigger payout. But, not too bummed, because, like you, I am no longer upside down on the stock. I am in pretty much at the same price as you. I expected some of the gains to erode either late today or Monday to profit-takers, but, hopefully, rumors will keep YHOO moving for the next couple of weeks.

I had an APR $32.50 call sold that looked like it was going to get called away until the earnings release. The lesson that I learned was to protect my downside next time by buying a put (maybe $30?). I would have made out if I had done that, and then bought the stock back when it was ~$28. I guess it is easy to see in hindsight.