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Closing Bull Call Vertical SMG, Nearly Max ProfitWe are closing out our 90/95 bull call spread, earning a debit of 4.99 by selling the 90 Cs and buying back the 95 Cs. We have made a profit of 49.7/contract, with a maximum potential profit of 50. The potential possible gains of holding the position are nearly negligible, so we are taking the successful trade and closing it out now, to best preserve strong risk/reward characteristics. Below, we've attached our methodology for why we took the position initially. We sat the vertical below the market, essentially betting on the market staying above a place it already was very far above. This is one of our favorite strats, and has proven profitable often, despite the natural consequence of having to risk an amount significantly larger than the potential reward. -- Jan 20, '19 -- " We are bullish on both the technicals and fundamentals of SMG . The multinational corporation, known for its consumer fertilizers and pesticides and new expansion into hydroponic equipment for the marijuana industry, has been trading in an up-channel. 2019 Q2 earnings beat estimates, with EPS of $3.64 (.22 above forecasts) and a top line of $1.19 billion (greater than the estimated $1.16 billion). The biggest growth opportunity is in its Scotts' Hawthorne subsidiary, which provides various products (hydroponics, fertilizers and lighting systems) to the cannabis industry. "
NYSE:SMG
by LaurenTrading
RISK ARB OPPORTUNITY: SKY BUYOUT There's been another big deal developing ($29-30B) so I figured I'd post another arbitrage, in this case, 'risk arb' or Merger Arbitrage. Fox needs to raise its offer of 10.75 pounds per share for the 61 percent of the British pay-TV company it doesn’t already own, in order to challenge Comcast’s 12.50 pounds per share bid. Comcast, which already won U.K. approval for its Sky approach, has a deadline of Friday to put the 22 billion pound ($29 billion) proposal to Sky shareholders under U.K. takeover rules....The tussle over Sky is part of a wider bidding contest between Comcast and Walt Disney Co. for the bulk of Rupert Murdoch’s media empire, as each tries to scale up to take on streaming competitors Netflix Inc. and Amazon.com faculty.chicagobooth.edu www.newyorkfed.org Although it's formally an arbitrage strategy, purists would argue that it's not a pure arbitrage as it incorporates speculative aspects and is not as riskless as other strategies such as convertible arbitrage which fully hedges deltas: The main basis in a stock-for-stock acquisition revolves around the idea that the target's stock will often trade at a lower market price compared to the exchange ratio that will apply once the deal is closed. Traders will purchase the target's stock and receive an excess value of the acquirer's stock when the deal is closed. To hedge risk, traders will short the same number of the acquirer's shares based on the exchange ratio. The objective is to capture the spread between the target's share price at market and the closing price based on the exchange ratio set by the acquirer. Spreads can be between 5-10% (median) for deals that close upwards of 55 days. Unlike other arbitrages, risk arbs can be done quite easily, but like all other strategies, can also become more efficient and complex if done professionally. Risk arb funds can also be good diversification for a portfolio as they often generate superior risk adjusted returns in poor markets. www.bloomberg.com
SEducation
by UnknownUnicorn2421992
EURUSD: Closing out short here for small 22 pip profitEURUSD Update Friday Currently Short EUR on this pair from 1.1657 as per last comment but it's not going very well. Fed news was dovish enough to give the pairs some respite, for now at least. Today's low is above yesterday's and it's enough to give the pairs a lift back to 1.16652 again and destroy the 23 pips profit if not taken now. This gives us 23 pips (of stops) to play with for the next trade So am closing out the short at current values (1.1636) and going flat across all the pairs for now to take what few profits are still left on the shorts. Still believe USD has much further to rise but have to accept, looking at price action over last 24 hours, that it probably won't be this week now. Therefore prefer to flatten out across the all pairs and await next clear signal
by sumastardon