Tuesday, April 21, 2009

Violent Portfolio: Adding another Merger Arb

So the market has gotten a little worried and I want to lock in some 4% gains in less than 2 months by arbitraging the prices of PBKS and MTB. Remember the beauty of Merger Arbitrage is that the net cash outlay is positive (meaning you should have a positive cash position after executing the trade). Because they have, in a way, 0 net investment, these strategies are usually leveragable. Most merger arbitrage funds use significant leverage!

Disclaimer: I am long PBKS, short MTB

Here it is:

strategy security price units cost Net
Buy PBKS 7.95 1000 5 -7955
Sell Short MTB 48.23 -170 5 8194.1

No comments:

Post a Comment