The Blackstone Group (NYSE: BX) shares are trading higher this morning after the company announced that BX will buy leveraged-finance specialist GSO Capital Partners for as much as $930 million. BX said in a statement that it hopes to capitalize on opportunities created by dislocation in the credit markets. The combination of GSO's businesses with BX's debt operations will almost double BX's total assets to more than $21 billion. If you think that the company won't fall by too much in the coming months, then now could be a good time to look at a bullish hedged trade on BX.

After hitting a one-year high of $38.00 in June, the stock hit a one-year low of $17.30 yesterday. BX opened this morning at $18.36. So far today the stock has hit a low of $18.10 and a high of $19.96. As of 10:35, BX is trading at $19.84, up $1.74 (9.9%). The chart for BX bearish and steady.

For a bullish hedged play on this stock, I would consider a June bull-put credit spread below the $15 range. A bull-put credit spread is an options position that combines the purchase and sale of put options to hedge risk in case the stock doesn't do what you think but still leverage nice returns. For this particular trade, we will make a 16.3% return in just five and a half months as long as BX is above $15 at June expiration. Blackstone would have to fall by more than 24% before we would start to lose money. Learn more about this type of trade here.

MAJOR PAPERS:

• As early as today, The Blackstone Group LP (NYSE: BX) may announce that they are buying the New York hedge fund GSO Capital, reported the Wall Street Journal. Terms were not disclosed.
• The Wall Street Journal also reported that Merrill Lynch & Co Inc (NYSE: MER) could receive a chunk of the $3B to $4B they need from a Middle Eastern government investment fund, while Citigroup Incorporated (NYSE: C) may get as much as $10B from foreign governments.
• JP Morgan Chase & Co (NYSE: JPM) is has hired former British Prime Minister Tony Blair as a part-time adviser to the company, the Financial Times reported.

OTHER PAPERS:

• Time Warner Inc (NYSE: TWX) has made an undisclosed investment in Web-based social community Gaia Online, the New York Post reported. The site, aimed at teenagers, has other investors that include The Walt Disney Company (NYSE: DIS) and Sony Corporation (NYSE: SNE).

Back in early July, Reddy Ice Holdings Inc. (NYSE: FRZ) announced a $1.1 billion going-private transaction with GSO Capital Partners. Reddy is a manufacturer and distributor of packaged ice, serving about 82,000 locations in 31 states.

However, because of adverse weather, especially in Texas and Oklahoma, the company has experienced some softness in its results.

Well, an activist fund, Shamrock, is not convinced and thinks the price tag is "grossly inadequate." In fact, the firm plans to vote "no" on the deal.

Shamrock thinks Reddy is worth about $42 to $44 per share. Keep in mind that the current buyout offer is $31.25.