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Here Is How To Multiply Your Return On The Microsoft-LinkedIn Merger Arbitrage Trade

The $196-per-share buyout offer from Microsoft has made LinkedIn's (LNKD) investors tons of money as the stock rocketed by about 50% in just one day:

The best part about this offer is that it is a 100% cash payment. The market thinks the deal is likely to close, so the spread between the offer price and the current market price of the stock is only about 2.2%. The companies' CEOs indicated that the deal will likely close by the end of the year. This means that, if you buy LinkedIn's shares now, you will only earn about a 4% annualized return with this trade (and there is always a possibility that the deal will break, in which case your downside risk is pretty substantial - check out the pre-announcement price of LinkedIn's shares). The good news is that I have found you a deal to substantially multiply your return with the same type of trade but considerably limit your...