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Daimlerchrysler AG (NYSE: DCX) opened at $81.22. So far today the stock has hit a low of $80.67 and a high of $82.84. As of 12:20 p.m., DCX is trading at $82.60, up $5.00 (6.4%).After hitting a one year high of $77.99 yesterday, the stock has already established another high today after news of a buyout bid from Magna International and an unnamed private equity partner for the company's Chrysler unit. The technical indicators for DCX have been bullish and slightly deteriorating, while S&P gives the stock its worst 1 STARS (out of 5) strong sell rating.
For a bullish hedged play on this stock, I would consider a July bull-put credit spread below the $65 range. DCX was below $65 in early February, but has formed support around $66 since. This trade could be risky if the bid falls though and the company reverts to its previous prices, but the support around $66 could protect our position.
For more news & views about mergers and acquisitions, please see BloggingBuyouts.
Brent Archer is an options analyst and writer at Investors Observer (Free Subscription). DISCLOSURE: Mr. Archer owns and/or controls diversified portfolios of long and short stock and option positions that may include holdings in companies he writes about.
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