ANSS SNPS - Slick Arb or just plain Sicko?

Investment Analysis Clubs Jim Royal
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This is a little far afield for this board, but you guys think better than I do and I would appreciate any thoughts…

ANSS is expected to be acquired by SNPS for $197 per share plus 0.345 shares of SNPS. Deal is pending regulatory approval and should close in 2Q 2025. My analytics say that SNPS is attractive - I already own shares. I also bought ANSS recently as share were trading ~8% under the deal price. Today, it’s around 9%.

I wonder if a better play would be to buy ANSS ($340) and then cover those shares with a June or July 370 call, paying around $15. I benefit by collecting the option premium of ~4% of current ANSS price and as long as SNPS does not rise by more than 8%, this pays better than holding ANSS shares and collecting $197 plus SNPS shares at closing. Plus, should SNPS decline or the deal get canceled, I have a few dollars to offset any losses.

Would appreciate any thoughts…
Vince

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Hi, Vince,

While you can make more on one than the other, you’re really betting on two different outcomes, even if it’s on the same/related stocks. So I would make sure that you’re fully comfortable with the outcome you are betting on and think about these trades in isolation from one another.

Best,

Jim

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Thanks, Jim, as always.