fuzzballl 4:30 am on Thursday, January 3, 2019

CELG

Bristol-Myers to buy Celgene in a $74 billion deal; Celgene shares surge…

https://www.cnbc.com/2019/01/03/bristol-myers-to-buy-celgene-in-a-74-billion-deal.html

john4419 5:11 am on Thursday, January 3, 2019

@Fuzzy.

Would appreciate your thoughts on a predicament I have. Presently I’m holding shares in CELG following an assignment and still under water, I have been slowly selling calls in an effort to reduce cost basis. Obviously the stock will now jump but the increase in the calls will swallow the the increase.
Would it be be best to buy back the calls, if not called away, then wait to see where the stock settles, before continuing to sell calls at the higher strike, or just close out both and move the loss to a LEAP?
- fuzzballl 6:26 am on Thursday, January 3, 2019
  
  That’s a good question. Article says CELG holders get 50 bucks plus one share of BMY for each CELG share for a total of 102.43.
  
  I guess you could try to make it up on covered calls on your BMY position. Can you roll the 66 calls out and up as far as possible in 2021? Maybe those would eventually get exercised and you’d get a few more bucks. Buying back the calls might work while the stock is still only at 89. Let’s say you pay 25 to buy them back then that cost would come out of your 102 max value leaving 79 so maybe a 13 dollar improvement if the 102 holds as the final buyout price…if I’m figuring this right. Help anyone??
  
  Not sure you can move to a LEAPS position since all CELG options will cease to exist.
  
  Tough position to be in. Guess it’s a reminder to us all about individual stock risk and if we’re selling calls in the hole then spreads might be the way to go or leave a few shares uncovered.
  
  Any other ideas out there?
  - Jeff 6:45 am on Thursday, January 3, 2019
    
    I see LEAPs up through 100 still have premium. Rolling to a strike that is unlikely to be breached (at a severe debit) will save you a few bucks.
  - john4419 6:47 am on Thursday, January 3, 2019
    
    Thanks for your help guys, I decided to close the calls and bought for 19.75. Will need to get my head around this !
    - fuzzballl 6:53 am on Thursday, January 3, 2019
      
      I think what I’m seeing now is original basis of 94.50 and buying back the calls for 19.75 gives a new basis of 114.25 minus premium received when you sold the calls.
      - john4419 6:59 am on Thursday, January 3, 2019
        
        You are correct.
jsd501 5:20 am on Thursday, January 3, 2019

Unfortunately, my cost basis is 93.37 but I will be happy to get rid of my 700 shares.
- john4419 5:24 am on Thursday, January 3, 2019
  
  My cost basis is 94.51 problem is the 66 calls!

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