Thread by @puppyeh1

Here's a trade I 💕 in this SPAC pullback, and added to today: selling $PSTH Jun $20 puts. They closed at 80c...

I'm hardly the axe on this name (looking at you @AndrewRangeley ) but in terms of risk/reward this is about as juicy as it gets...40% RoI in a few mms

(mini) THREAD

$PSTH is the Ackman SPAC. It has a bunch of cash in trust ($20 a share) and no announced deal.

SPAC deals take a while to close. PWC says '3-4 mms': pwc.com/us/en/services…

3mos is basically about as fast as you can ram one through...

...but the Ack SPAC is whale hunting and whatever they hope to buy would be a massive transaction ($4bn in trust, plus a big committed PIPE).

Complexity + size = increased time to close.

Today is Mar 5. These options expire in mid-June.

unless Ackman announces a deal in the next 3 weeks, I think it's basically impossible for him to close this transaction before these options expire...

....meaning you get paid 80c (against whatever you have to put up to sell the put, at my broker, ~$2/share), to commit to get long $20 worth of cash at $20.

This is a 40% RoIC for 3.5mos work. With very little risk (beyond mark to market on the puts).

Keep in mind also that as the market goes lower/gets wobbly the odds of doing a deal GO DOWN, not up. So the value of this put should be going down...

The put leg here is MASSIVELY misunderstood and misplaced. Below $20/share in the next few months you're shorting a cash box...

...who wouldn't mind getting long a bunch of cash and then just redeem?

You get paid 40% ROIC to do this. Yes its not scalable. Yes you need to wear mark-to-market. Yes this is options to if you didn't understand even a word of this thread, its NOT FOR YOU.

DYODD always...

...but if none of that applies, this seems highly compelling and (to me) the best risk-adjusted way to play the current SPAC meltdown.

Let Ack's cash box pay you 40% ROICs in a few months. Then go on summer vacay w the proceeds before he even announces a deal 😎😎

GLTA 🙏