Options in Cairn India

Couple of weeks back Vedanta group decided to merge Cairn India with Vedanta Ltd. It didn’t come as a surprise and it was only a matter of time before the group went along with a merger. I guess since the acquisition of Cairn India in 2010, Vedanta group had their eyes set on the cash of Cairn India.

I am not a big fan of Vedanta group corporate governance standards. But to be fair to group, sharp crude oil price fall in last 8-9 months coupled with Rs 20k crore demand from IT department had suppressed Cairn India valuations. So in the changed scenario, proposed merger might even benefit Cairn India shareholders. On the other hand, only pure play oil E&P company in India would be saddled with metal assets. Some shareholders might not like it. One of the biggest institutional shareholder LIC has opposed the merger on valuations front.

Given the sharp share price fall in Cairn India it makes sense to sell some puts of July series.

Disclaimer: These are my personal views and you should do your own due diligence before acting on anything written in this blog. Please take reasonable care while trading in options, especially while selling. I am not advising anyone to sell or buy options. My purpose of writing this blog is to highlight my trading strategies


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