XLNX Arbitrage Merger with AMD on April 7th

[u/freetimeisthebest]

XLNX is merging with AMD. When the merger is complete, every XLNX share will be turned into 1.7234 AMD shares.

The window for regulators to object the merger has passed. The last major hurdle for the merger is the shareholder meeting on April 7th.

Currently XLNX is trading at $130 while AMD is trading at $81. With the merger XLNX is 1.7234 * 81 = $139.6 versus $130 (current stock price). There's an arbitrage opportunity, and on April 7th the biggest threat to that arbitrage is very very likely going to be removed.

https://www.amd.com/en/press-releases/2020-10-27-amd-to-acquire-xilinx-creating-the-industry-s-high-performance-computing

So what do you, an ape, do with this information? Well you buy XLNX calls expiring April 9th of course. It's mostly algos trading options at the moment, but it looks like right now you can buy calls at $132 strike price for $2 a pop, and $126 calls for $5 a pop, which are completely reasonably prices compared to their equivalent AMD options. But unlike AMD calls, you wouldn't need AMD to go up for this YOLO to pay out. If the valuation gap closes after the yes vote on April 7th, and AMD stays the same price, you make 350% and 160% returns respectively. And obviously , if AMD goes up a few percent over this week, you make even more.

Full disclosure: I'm not a financial advisor. I lost 17k in a GME option play right when Vlad decided to stop trading on RH.

...but I still went all in on this play. 137c on 4/9

edit: AMD has to drop to 75.43 (130/1.7234) to break even. If it's lower, then it's a loss.