How to Play Hasbro’s Potential Buy-Out (HAS)

Shares of Hasbro Inc. HAS are higher in the pre-market by 4.00%, currently trading at $42.75. The stock was trading as high as $46.00 earlier in the session on news that the company is being shopped by private-equity firm Providence Equity Partners. The Wall Street Journal has confirmed this rumor. However, on CNBC moments ago, David Faber said that Hasbro’s board is not, has not, and will not ever be in talks with the private equity firm and that a buyout is NOT in the works. Hasbro was trading $40.00-41.00 before this rumor surfaced, which is where one would expect the stock to trade down to if these rumors are only that. The way to play this is to buy the July $42.50 straddle at the opening bell, if you can get it for close to $2.50. Given the stock’s recent trading range, this straddle has a high probability to be profitable should the stock get bought out or return back to “normal” trading levels. Hasbro, Inc. is engaged in providing children's and family leisure time products and services with a portfolio of brands and entertainment properties, including a range of toys, games and licensed products. Its offerings include a variety of games, including traditional board, card, hand-held electronic, trading card, role-playing and digital versatile disc (DVD) games, as well as electronic learning aids and puzzles.