This morning I BTC 4 YHOO May08 27.50 Puts split between an IRA account and my taxable account.  I then STO 4 YHOO Jul08 27.50 Puts in the same accounts.  I netted $262.02 for the 4 rolled out Puts.  I will own these shares at 25.90 if put to me.

Well, as you probably have heard, MSFT withdrew it offer for YHOO over the weekend.  I read that MSFT raised its offer to $33 from $31 per share but YHOO still wanted at least $37 per share.  I wonder if I smell a class action law suit by the stock holders (I own 400 shares) against the YHOO board.  That has been suggested by more than one financial writer/speaker as YHOO tried to resist the take over.

Another scenario I read is that MSFT may come back some time in the future with a new successful offer which may actually be higher than their last one but less than what YHOO wants.  There is precedent for this with past take overs by other companies, notably ORCL’s take over of BEA Systems and PEP’s take over of Quaker Oats.

I don’t know how all of this will play out but by my actions I guess you could say I am bullish that MSFT or somebody else will come along and purchase YHOO or that YHOO will actually make good on their plans and it will create more value for its share holders.  I am encouraged that YHOO did not fall further than it has and that it has even come back some as the day has moved on.  Watching the real time trades is what tipped me in favor of rolling out instead of just exiting my Put positions.