ASX + SGX ??

by Raymond Chan

Stock: ASX.ASX
Current price: $34.84

Merger or not, ASX at current level of mid $34 is presenting value.

Fundamentally, its givng 5.5% fully franked yield with 10% EPS growth potential.

The attraction is, it has retraced to pre-merger price.

Should merger proceed (at the moment slighlyt greater than 50% chance) with FIRB's decision in 30 days, then this will be a cheap level for the stock.

If merger does not proceed, then we may get some weakness.

Whilst the merger process takes its time, meanwhile, stock may trade in a band with the $34/$34.50 level being the bottom band.

Options Strategy:

Go long by selling May $34.50 put but with downside protected to a maximum $1 loss with the buying of May $33.50 put for net credit of 32c per contract.

Sell May $34.50 put and buy May $33.50 put

32c return in a dollar for 52 days.

Level of risk: moderately high, suitable for trading.


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