Realizing that in the short run Yahoo management doesn't seem to have my best interest at heart, I sold all of my Yahoo! (YHOO – $28.67 ) shares at around $28.75, which allows me to lock in most of the merger premium if inaction by Yahoo management drives the stock back to $20.  Just in case, I did pay just over a buck for 30 strike calls.  If someone does pay up, I will at least get to participate in the upside. 

Randall Smyth makes an interesting case for a potential eBay (EBAY – 26.74) Yahoo tie up.  While the tie up may be good for the competitive marketplace, it doesn't seem to do as much for Yahoo shareholders as Microsoft (MSFT – $28.12) was willing to do.

For my favorite and most articulate coverage of Microsoft Yahoo Merger, see Henry Blodget at Silicon Alley Insider.

Disclosure: I own EBAY and MSFT.  I own 30 strike calls on YHOO that expire in April and July.  I am short (sold) January 2009 40 strike calls on eBay.

Photo:Sigalakos, Creative Commons, Flickr