December 11, 2008 –
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RELATED TICKERS: CEG
Even if you believe EDF's bid will fail and Buffet will get the company, you can still make a profit. While CEG is trading above the $26.50 that Buffet has bid, it still seems like an arbitrage opportunity to me. According to Zecco the average price of a January call for $30 is $.80, and these calls are trading at a high volume. The current price of the stock is about $27.25. With two merger offers, the odds of the stock sinking below $26.50 seem slim. That's $3.55 profit/share by January if EDF wins, and $.70/share otherwise. You can also write $25 calls for $3, which gives you $.75/share in either case. [more]
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