Large trade signals investors don't expect Microsoft to pay same premium for Yahoo
An options trade involving 21 million Yahoo shares yesterday signaled that at least one major Yahoo investor no longer expects Microsoft to buy the whole company for $31 per share. More like $25 to $27.50, analysts told Reuters, which also reports all the details of the trade with lots of jargon. But for the rest of us, very basically what happened is that an investor bought a whole bunch of options contracts that estimated Yahoo shares would trade at $25 in October and resold them as options contracts estimating shares would trade at $27.50 in October. If Yahoo shares close at $27.50 in October, the investor's profit will be $18.2 million.