For those of us who do not leave £50 pound notes laying around on the floor, there is an opportunity in Lonmin shares at present assuming you can actually get a short on in the ordinaries with your spreadbet or CFD firm.
The Nil Paid subscription cost is 140p and with these trading in the market currently at 145p then the “in” price is 285p (excluding spread) in Lonmin fully paids. With the Ordinaries trading at 295p then that is a risk free 10p (again ex spread). This has narrowed from yesterday however when the arbitrage opportunity was actually almost 20p at one point.
I am aware that due to the 20% short position in Lonmin that it is quite difficult to get the borrow on the stock and so not every firm will offer the short facility. If this is the case, we think that there is a real short squeeze in any event to come once the rights complete next month. Not least Socious who need to cover thick end of 2m shares. Ouch! The smart way to play this is to simply buy the Nil Paids and take up the rights.