somebody help me with this arbitrage...

[JS80]

PONN.ob to buy IASG, stock merger 0.29 PONN.ob shares per IASG. Currently PONN is trading at ~$20, which values IASG at ~$6. Currently IASG is trading at 3.87. Short PONN and Long IASG for 57% guarantee?

 

[iversonyin]

Talk about thinly traded stock. The pro didn't jump into this probably because of volume. Not a bad trade. Keep it light. The thing trade 1500 shares a day. Good luck accumulating

 

[JS80]

i hate that PONN is otc, but it's bid is 20.49...this arbitrage spread makes no sense.

IF i were to actually short PONN at ~20 and go long IASG at ~4, are there any downside risks?

 

[iversonyin]

Originally posted by: JS80
i hate that PONN is otc, but it's bid is 20.49...this arbitrage spread makes no sense.

IF i were to actually short PONN at ~20 and go long IASG at ~4, are there any downside risks?

Liquidity risk. That's why the spread is $1.5! Downside risk is you have NOONE to take the stocks off your hands. Or the merger falls apart for whatever reason. I would do 50-100 shares at best. Put in a offer for PONN b/w the spread, you would probably get taken. Not a bad trade, but liquidity is a problem.

 

[theeedude]

Originally posted by: JS80
i hate that PONN is otc, but it's bid is 20.49...this arbitrage spread makes no sense.

IF i were to actually short PONN at ~20 and go long IASG at ~4, are there any downside risks?

Deal could fall through...

 

[dnuggett]

None of you told him to move on? He's not going to short PONN no matter how bad he want's it or how hard he tries. The shares won't be available.

 

[bobdelt]

Will your broker allow you to short OTC?