Closed Out RDA Microelectronics

I closed out my position in RDA Microelectronics (Ticker: RDA) today by buying back the Puts I sold. I bought back the June 2014 $17.50 Puts and the September 2014 $17.50 Puts for $0.10. These Puts were sold with an average price of $0.3109 from 12/30/13 through 1/16/14. It’s highly likely that this merger will close, but there has been controversy with the parent: Tsinghua Unigroup not obtaining the proper pre-approval from the NDRC in its acquisition of RDA Microelectronics. This should no longer be an issue since the PRC has announced changes in its outbound investment rules, but you never know. As the options saying goes: “when in doubt, close it out”.

January Performance

I raised some cash at the end of 2013 and entered 2014 rather conservatively. I’ve been pretty much 100% + invested during the past two years, but I am more cautious now. I ended the month of January down -0.67%. The earnings disappointment from Apple (Ticker: AAPL) and MasterCard (Ticker: MA) did not help. On the other hand the closing of Spreadtrum Communications and Viropharma contributed positively to the January results as well as the positive earnings report from Constellation Brands (Ticker: STZ). I know Spreadtrum Communications closed in December, but the Puts I sold expired in January so the gain was officially booked in 2014. The only arb position I have open now is RDA Microelectronics (Ticker: RDA), which is currently awaiting regulatory approval in the PRC. Now is not the time to get aggressive, but I do have my shopping list ready.