So many bloggers are negative on the Yahoo! (YHOO – $29.20) board and management. Om Malik calls the Yahoo! board asleep at the wheel. I've been following and supporting fund manager Erik Jackson's small guy Plan B campaign since he started back in 2006.
As far as my trades go, I've bought Yahoo every time it gets into the mid 20's and sold it via calls written at 30 (or thereabouts) for a couple of years now. I called Yahoo! looking ready for a sale on January 1st of this year. I saw the company as cheap in the low 20s and never had much confidence in management to monetize the fantastic online brand they have. So while I feel like a hero for noticing the low price and naming Yahoo as a buyout target, I missed when I specifically said that Microsoft (MSFT) was an unlikely buyer. Well, I'd rather make money than be right.
So the board will reject Microsoft's offer. Now what? 
There is a ton of corporate governance case law that puts a board at an obligation to go into "auction mode" when receiving an offer. They are required to get a high price for the company over protecting management at this point. I think Yahoo will go a little higher, perhaps to the mid-30's. I'll be a seller. I'm already short 25 calls, 30 calls and 35 calls against about half my position. I'll sell the other half and trade around a $27-33 range after that (buying around 27 and selling around 33).
Disclosure: I own Yahoo (YHOO). I am short 25, 30 and 35 strike calls. I own Microsoft (MSFT). I am short 40 strike calls. My last trade in Yahoo was a buy; my next one will likely be a sell. My last trade in MSFT was a buy around $28. I am more likely to sell out of the money calls or puts on MSFT in the next few weeks than I am to change my stock position.
Photo from Xenelon via Flickr and Creative Commons.
Photo:pbo31, Creative Commons, Flickr