Remember that time you bought a stock and the very next day it was taken over and you made a ton of money? No... we can't either. The good news for us though is that there are ways to take advantage of certain "volatility blips" that occur when a stock becomes a takeover target. It is possible that the key to finding this edge resides in watching the options market for that particular stock. This strategy is a limited risk approach to capture the volatility aberration in stock options prices that can occur from the initial media hype of a rumored takeover.
We recently downloaded a free PDF from a 20 + year veteran, former CBOE market maker and trader for Goldman Sachs and it is available to TradingPub members free of charge:
This PDF Download covers:
- Capturing the volatility blip that comes after the initial hype period
- Understanding the volatility component of longer vs. shorter term options (page 2 of the report)
- Criteria needed to make the "surveillance list" (hint, trading at 6 month high or low)
- Which strikes to focus on (Step 1)
- Which months to focus on (Step 2)
- Picking an Entry (Step 3)
- Understanding the profit scenarios and maximum loss amounts (page 6 of the report)
