Monday, October 8, 2007 2 comments ++[ CLICK TO COMMENT ]++

TRB: Quick Thoughts by WSJ Blog

WSJ's Blog has a recap of the Tribune takeover. The stock is up more than 1% today and I suspect that it will keep moving up. There are some positive news with regards to other deals on Wall Street so I think the financing issues are less of a concern now. The blog covers the question marks surrounding the deal but forgets the most important issue: FCC approval. I think financing and breaking covenants is less of an issue than the FCC rejecting the deal or forcing Tribune to sell off some holdings.

One of the thoughts running through my head is whether to sell off my US Treasury bond (TLT), which is probably down around 10% in C$ terms and up around 7% in US$ terms (that's how much the C$ has moved against the US$ since purchase), and invest in Tribune. I want to hold the TLT since I am bearish and I expect it to do well if the market corrects. But on the other hand, I want a much larger stake in Tribune...

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2 Response to TRB: Quick Thoughts by WSJ Blog

October 8, 2007 at 5:23 PM

Though I am not making a recommendation I would like to point out that to get the biggest bang for a buck, the $30 November call option is still at $1.10 as of today's close.

Instead of buying 100 shares at $2875, you could buy 20 contracts for $2200 + $30 commission. If the deal is announced to close before the November expiration date, the stock will jump to at least $33. Since the deal should close sometime in December, there is a good chance that the FCC will be out of the way over the next week or two and Zell will have to announce the closing date at least two weeks before the actual closing.

A simple profit calculation…
Stock - 100 shares: 3300-2875 = $425 profit.
Option [TRBKF]: 6000-2230 = $3770 profit.
(TRBJF is a crap shoot)

Disclosure: This is an opinion of a CrossProfit analyst and may not mirror the opinion of CrossProfit.com. Options carry a greater risk as their value can go to zero. This comment is for educational purposes only and is not meant to be taken as individual investment advice. Do your own due diligence or consult a licensed advisor. CrossProfit analysts and associates are long TRB.

The Cross Profit evaluation can be seen at http://www.crossprofit.com search symbol = TRB
If this site does not appreciate this type of comment, I apologize and please remove.
CrossProfit (BBK)

October 9, 2007 at 10:42 AM

I am not into options and they are too risky for me. I think they kind of make sense for takeovers but if this deal gets delayed then you lose everything.

Maybe someone else reading this will find it benefitial...

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