Post by
AUborealis on May 30, 2021 11:05pm
The RECO short share position may be covered by a
corresponding proportional ROE long position.
Since the announcement of the proposed acquisition there were several days when a trader could 'lock-in' a potential 3-10% arbitrage profit by simultaneously Buying ROE and Selling RECO at the 1/.046 Ratio. (ROE was consistently selling at a discount to the proposed exchange ratio of 1/.046}.
Or ~ Long 22 ROE to Short 1 RECO.
What that means, if true, is that on a completion of the Acquisition the Long ROE shares would become Long RECO shares, and those shares would 'cover' the previosly 'shorted' RECO shares, leaving the position 'flat'...and making an arbitrage profit of 3-10% of the 'gross value of the strategy deployed'.
Where things could get really exciting is if the 'deal' doesn't go through.
Then there would be no conversion of the ROE shares into RECO shares.
And the arbitrageurs would be left holding the bag on ROE, and scrambling to cover the RECO short position via the Open Market.
Now add in a blockbuster announcement from RECO.
The 'News' from 6-1 is slated to be released at about the same time as the results of the Vote on the Deal.
Talk about drama.
Comment by
Galaxym31 on May 31, 2021 12:58am
News could be released on the fist zone if there at about 4500 feet also if most of the selling short occured between 3 and 5 $ buying ROE isn't much help .Just an idea .