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.
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.
ReplyDeleteFor today, though...
YA-HOOOOOOOOOOOOOOO!
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.
ReplyDeleteI guess we'll see how the stock reacts next week. At least I'm no longer underwater... my cost basis is 29.50.
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.
ReplyDeleteI 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.