BUY DEUTSCHE TELEKOM

CLOSING SCRIP ARB OPPORTUNITY: +2.3%

Although we like the MT picture for DTE this was a short term technical trade. So we step aside and book some profits. +2.3% 

For more trading ideas: http://monacoalpha.com/

 

BUY DEUTSCHE TELEKOM
SCRIP DIVIDEND ARB CREATES OPPORTUNITY

Thursday • 15 June 2017 • 15:39

DTE went ex div on June 1st. Shareholders can elect to receive shares in cash or shares. . Over the record date short interest has increased by 350m shares which will be utilised for scrip arbitrage.

Using the subscription ratio we estimate roughly 28 entitlements to 1 new share, so 12mm shares that need to be hedged (some will have been done already, let me know if you want the calculation).

Since the ref price is the VWAP today it pays for those executing the arb to get the stock down. The 12m shares are doing some damage today, The stock is down 2% currently. For those of you happy to make a couple of percent, this is a good trading call.

For those of you worried about a continued correction it has underperformed the dax by 5% in the last week

BUY DTE here or till the close.