Split-Offs proved to be very lucrative in generating low risk arbitrage returns. Just last week yet another split-off (ECL/APY) closed successfully with $2,100 ‘riskless’ return for hedged trades (c. +11%), while at at the same time unhedged positions delivered $10,000 (c. +50%-70%) in a month. The difference in pay-offs is clearly very material; however, higher returns seemingly come with higher risks (exposure to share price fluctuations).
Current Price –$194.12
Offer Price – $215.69
Upside – 11% or $2100 for Odd Lot holders
Expiration date – 2nd of June, 2020