It is a trade that profits by exploiting price differences of identical or similar financial instruments, on different markets or in different forms. – investopedia
Last year, minority shareholders of DGTL were given the option of receiving the payment in cash at P1.6033 per share, or in the form one PLDT common shares valued at P2,500 apiece for every 1,559.28 Digitel shares
Many traders and some fundies bought DGTL shares just to do arbitrage play as TEL shares market price is above 2500.
Buy at 2500, hold it for few weeks, flip it and sell more than 2500. Sure gain!
On Friday, January 27 former DGTL shareholders will receive their TEL.
If these arbitrage players decided to sell on Friday as long as it’s above 2500, expect the TEL stock to drop as supply will increase.
In law of supply and demand, the increase in supply will decrease the price. 😉
Sir miner of financemanila posted “As I said before, TEL will drag down the PSE index as Jan 27 jail break approaches.”
Using a bottom-up approach investing
We know that TEL is the bellwether of Philippine Market. Once TEL moves southward, expect the other index stocks to follow. In effect, PSEi will also move downward and then the whole Philippine market will have a negative sentiment.
Notice that most of the stocks are already at the overbought levels. This will be a good excuse for them to take a breather.
But for some. This is a good buying opportunity 😉
I’m still bullish for medium term. This is just a plain correction.
Reserve your energy. Attack position on Friday.
Caveat! Just my speculation!
PS: That’s not my drawing lol