As the Google (GOOG) ad deal is likely to be scrapped, I am looking for the eventual sale of Yahoo (YHOO) to Microsoft (MSFT) at around $19-$22 per share, compared to a previous offer in the low $30s. Call option activity is heating up for November in Yahoo around the $13-$16 area, with over 20,000 contracts traded today at the $20 strike for January 2009.
Carl Icahn has stated previously on CNBC's Fast Money show that some type of deal will get done with MSFT, and Icahn will likely discuss the issue when he appears on again on Fast Money on Monday 11/3. I think YHOO is set for an up $7, down $2 trade at this point and could combine with AOL (TWX) first, then have MSFT buy both to better compete with Google (GOOG) on the web.
