Roku got bought. Fox is paying $160 a share. If you owned the stock, good news.
We owned a June/October 150 call calendar spread, and that headline is exactly why we're closing it.
When a buyout gets announced, the stock stops trading like a stock. The volatility we paid for disappears. The market knows where this ends, so the stock just sits and waits below the deal price. Roku is currently trading around $140, not $160. That $20 gap represents the time to close plus the risk the deal cracks.
The deal doesn't finish until the first half of 2027. Our long calls expire in October.
So we never collect the $160. We only get wherever the stock is parked when our contracts die, and that's somewhere between the low 140s and the mid 150s. Our 150 strike sits in the dead zone between the current price and a ceiling we won't reach in time.
Even if the stock floated to the full deal value, that's only $10 over our strike which we essentially paid $5.86 for. The buyout capped our upside at the moment everyone thought we'd won.
So we take the salvage value and move on. A losing trade that closes cleanly is a cost of doing business.
On to the next one.
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