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If there is a cash takeout, the IV will go down. If there is a share component to a hypothetical acquisition, the IV will potentially increase. However, I'm not
by totalZero 6y ago
If there is a cash takeout, the IV will go down. If there is a share component to a hypothetical acquisition, the IV will potentially increase. However, I'm not sure how likely that is. Just be aware that your Vega p&l could be negative, so extremely long dated calls with a lot of Vega may need a big gap between a cash takeout price and spot in order to be profitable.
- rlonn 6y agoThis reads like finance buzz bingo
- totalZero 6y agoI'm just saying that long-dated calls can lose money in a cash acquisition.
- friedman23 6y agoI'm already up 200% on my $150k bet. The IV was basically nothing a month ago.