PZZA: Collect $1200 (5.3%) premium for these short puts with strike at $45.
Contracts expires in 5.5 weeks on 21st Nov.
read news that Papa John's might be acquired by private equity and the valuation is about $64 per share.
As PZZA trades around $45, that's good arbitrage play if the rumours is true.
Anyway, PZZA at $45 is not exactly over priced even of the trade goes south so the risk to rewards seems justified.
Downside support level seems to be at $40 so if that level holds if price drops, will be incurri ng a $5 share loss which isn't catastrophic.
Designed the trade to be longer term for 5.5 weeks for news to play out and for valuation to close the gap closer to $64.
note: as of posting, the after market PZZA is gapping up to $55.
Credits to @jackNiffler for posting this trade opportunity that I would have otherwise missed.
| Side | Price | Filled | Realized P&L |
|---|---|---|
| Sell Open | 2.40 5Lot(s) | -- Closed |
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