rijk Posted July 12, 2011 Share Posted July 12, 2011 since the beginning of jun 2011, the spread between SPWRA & SPWRB has "exploded" from 1% to 25% as of today economic rights of both classes are identical, voting rights of class B are 8 x class A Total acquired 60% of class A and class B shares and proposed to merge the two classes by the end of this year shareholders voting requirement is a simple majority, i.e. a formality.... unfortunately, there don't seem to be any shares available to short can anybody think of a way to lock in the spread? regards rijk Link to comment Share on other sites More sharing options...
given2invest Posted July 14, 2011 Share Posted July 14, 2011 Market pricing this in. The options market and cost to borrow is pricing in the spread collapsing by Jan 1. Jan 25 puts = $8 and Jan 25 calls = 70 cents. So cost of buying put and selling call = $7.30. Means you are short the stock at sub 18, not todays current price. No free lunch... Link to comment Share on other sites More sharing options...
A_Hamilton Posted July 14, 2011 Share Posted July 14, 2011 What broker are you using? If this isn't on the threshold securities list, it is likely there is a borrow available at some price...your brokerage house may be unwilling to borrow from another brokerage house and may need to have shares in their own clients' inventories. Link to comment Share on other sites More sharing options...
rijk Posted July 14, 2011 Author Share Posted July 14, 2011 yes, unfortunately not many free lunches..... only need 1 or 2 a year..... short % on SPWRA is very high around 25%, broker keeps telling that there a only a limited number of shares available to sell short and suggests to keep trying..... regards rijk Link to comment Share on other sites More sharing options...
given2invest Posted July 14, 2011 Share Posted July 14, 2011 the borrow rate is -100% even if you can get it. there is no way to arb this. truly no free lunch here, sorry. Link to comment Share on other sites More sharing options...
twacowfca Posted July 14, 2011 Share Posted July 14, 2011 Thanks for posting, rijk. Have been studying the situation all day. Beginning to understand it. Will share my thoughts in a few days. :) Link to comment Share on other sites More sharing options...
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