YHOO, YHOO, YHOO, what are you doing to me?  You may remember that I sold 4 YHOO May08 27.50 Puts on 4/23.  It was down at the time but well above $28.  I believe that MSFT will eventually buy it but I had lost track of the deadline MSFT set for this Saturday.  There is a lot of discussion on this deal with two major opinions.

• MSFT will raise take an aggressive approach and attempt a hostile takeover.
• MSFT will walk away.

If MSFT walks YHOO will plummet back down below $20 where it was before the offer.  Because the price is drifting down I suspect that people are and taking some profits either in anticipation of MSFT walking or just to be cautious.

On the other hand, if MSFT goes hostile I think that YHOO will rebound and my Puts will be safe.

My opinion?  For what it’s worth, and I have no special insight, I think MSFT will go hostile and end up with YHOO.

My current favorite saying seems to be - Time will tell.

I finally sold a WM May08 16 Call on the one lot of WM shares that I own for a deposit of 18/25 in my taxable account.  I’ve written before in this blog about why I own it.  I don’t really know my basis because I have owned 75 of the 100 shares for many, many years and through several mergers so I am using the price of the 25 shares that I purchased in Jan 06 of 46.19.  That was near it high of course.

I also sold the following May08 Puts:

• 3 SGP 17.50 for 108.75 in an IRA account, 32.62% annualized
• 2 YHOO 27.50 for 190.50 in my taxable account, 54.05% annualized
• 2 YHOO 27.50 for 190.50 in an IRA account, 54.05 % annualized
• 2 GM 17.50 for 54.50 in an IRA account, 24.28% annualized

The reasons for SGP and YHOO are the same as last month.  SGP has just been beaten down too low and YHOO because of the pending MSFT deal.  GM because 17.50 appears to be its support going back 5 years and I think GM will continue higher from here, especially once the axle supplier get back to work.

I sold 2 YHOO Apr08 30 calls each in a taxable and IRA account for $84.50 and $70.50 respectively.  My basis is now $25.72 and $26.13 for these two sets of YHOO.

Last month I sold Mar08 32.50 calls on these shares.  YHOO has remained below 30 since MSFT’s offer to buy it at 31.  I had thought that it would rise above 30 earlier hence my prior sale at the 32.50 strike price.  I still suspect that MSFT will end up making a higher offer but have decided that I will take the higher premium and sell the 30 strike price each month for however many months this lasts.