The REAL Clown-Free Zone

[Steve Clawson]

Could someone please show this to The Freep before he decides to buy those `cheap' BBH puts and exercise them? (yes, I'm a lurker on SI that's been patiently waiting for them to go tits up and so haven't paid up for a membership).

http://www.amextrader.com/trader/amexcontent/amexcirculars/ic020563.pdf

BBH went ex-div yesterday. All July options are for 100 BBH shares _and_ $185.30 cash, due to the merger of IMNX and AMGN. The option symbol should have changed though, on IB to get the July quotes the option root is EIH. From August on there are now two sets of options, one for the old BBH (so now BBH + cash) and one for the new BBH.

There's an arb play in there...short the August EIH put and buy the same strike August BBH put (or buy the EIH call and short the BBH call, or...). Of course if you buy at the ask and sell the bid the spread today was about $2 so it's not really much of an opportunity, unless you go to the at and out of the money options where the spread is lower since you've also got a directional bet that the options will be in the money at expiration.

steve