OK ladies … Here is a little risk arbitrage strategy I’ve been employing on stocks that have a ZScore of less than 30 and are in the $5 rangeLike a GM or some such.

  It has worked VERY WELL.   Sell the put that's just out of the money and short the stock at the same time. Since the companies are on the bankruptcy radar the credits are pretty sizable. Put a stop on the short about 80% of what you sold the put for. If the stock tanks and you get assigned you simply cover the short. Not only making the credit from selling the put but also the amount of money that the stock was away from the strike price when you shorted it. The few times the short has been stopped out there was enough in the 20% remaining credit to buy back the put or just let it ride and expire.    

Man, my head hurts just reading that.

  Fo a relative newcomer, you're a smart fokker when it comes to options strategies...