"Traditionally, risk arbitrage is seen as a type of merger and acquisition arbitrage, and that's how we started, but now our risk arbitrage is not limited to this area but also includes various trading opportunities where securities prices are severely hit, as long as any corporate event may cause significant price changes, and we may benefit from it, it becomes a potential target for risk arbitrage."
"As for the current lawsuit cases of American tobacco companies, this has no special connection with corporate mergers and acquisitions. The courts and Congress have ongoing developments. The tobacco companies are constantly moving, and in principle, it is already a bloody and cruel battlefield."
"On the one hand, there are tobacco companies, they want to protect themselves, avoid taking various potential liabilities and risks; on the other hand, there are interest groups composed of authorities, government, courts, and many anti-smoking activists."
"The outcome of this war will inevitably affect the stock price of tobacco companies, involving tens of billions of dollars. So, as long as you have a good grasp, this is an opportunity to make money. In a typical risk arbitrage transaction, we will maintain a very open attitude, study every possible development, and trade tobacco or other stocks from this perspective."
"Of course, this may also be a directional trade. If we think that tobacco companies will win the next battle, we will go long on tobacco companies. On the contrary, if we judge that the other party will win the next battle, we will naturally stand on the short side."
"If we believe that the result of the next battle will cause the stock price to soar or plummet, we can buy straddles (buy the same number of call and put options at the same time. As long as the stock price undergoes any major change in either direction, buying straddles can make a profit)."
"On the contrary, if we judge that this war will not have any results in the short term or the price of options is too high, we can sell straddles. We have a very open attitude, and no fixed position: as long as the odds are high enough, we do not rule out any trading opportunities. In short, this is the business we have been doing for ten years."