I think the initial downside estimation was way too high given the stock traded in the 10s recently. No doubt Spirit is in distress, their senior 8% bonds trading at 70c last I checked (?) which implies distressed level. Assuming a 30% implied deal close, think we’re looking at a break in the LSD. But option markets imply lower deal odds now, I think the $20 calls are going for <20c in aggregate vs ~30c prior. In any case, I think one has to be cognizant that this can break into the low single digits when it comes to determining risk exposure.
Thanks for a good write up. With the recent development any update where you see SAVE trading in a break scenario?
I think the initial downside estimation was way too high given the stock traded in the 10s recently. No doubt Spirit is in distress, their senior 8% bonds trading at 70c last I checked (?) which implies distressed level. Assuming a 30% implied deal close, think we’re looking at a break in the LSD. But option markets imply lower deal odds now, I think the $20 calls are going for <20c in aggregate vs ~30c prior. In any case, I think one has to be cognizant that this can break into the low single digits when it comes to determining risk exposure.