Sometimes clever isn?t that smart.? PXP has reached an agreement to be bought by FCX for $25 in cash and .6531 shares of FCX.? A trader bought 10,000 of the PXP August 50 calls for 1.15, which has a vol of 20.00%
This is the largest trade in this name as it is essentially an off shoot FCX now.? Here is my question, why is this trader paying 20% vol for 65% exposure to FCX when they could buy 100% exposure to FCX for 26% implied volatility?
This is a strange trade, and the only way this trade makes sense is if there is an adjustment to the overall deal that makes PXP move much higher.? Something that is very unlikely.