RE:RE:CXR Option MarketHey Marcel. Think of it as insurance. The MAY insurance on a nominal basis (and the same on an implied vol basis) is much cheaper and the event they are waiting for is earnings. They are paying for their borrow so they have short term horizons. But If they do have a longer term negative view they could roll into June's in two weeks. Or not be short and buy June or July puts now and mitigate their downside. Buying Jun or Jul premium as a hedge is very costly at these vols. For example June 38's @ 3.60 and being short at $35 1for1. Stock would have to go to $31.40 just to break even.
It is quite remarkable that MAY's are trading at the same Vol as June and July with earnings coming up. I have never seen that happen before. Hmm... I'm actually starting to believe in these buyout rumors.