If you were an ZNGA owner who's also interested in FB, you won't necessarily sell ZNGA before actually buying FB, because you don't actually know that you can get FB at a price acceptable to you until trading opens. In other words, human beings could contribute to the ZNGA price, not just trading algorithms.
Good point. But if you were a ZNGA owner who wanted to buy FB at a lower price than the expected one, you would know that as soon as the FB price was lower than expected, the ZNGA stock would slide (as everyone was using it as a proxy). Subsequently, unless you sold within 2 minutes of the FB price being known, it wouldn't be a good strategy (as you would end up loosing money on the ZNGA sell).
That said, as long as you acted fast enough, that strategy was win-win. Either FB stock was too high and ZNGA rose too, or FB was affordable and you could quickly change to that, before ZNGA fell.
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If you were an ZNGA owner who's also interested in FB, you won't necessarily sell ZNGA before actually buying FB, because you don't actually know that you can get FB at a price acceptable to you until trading opens. In other words, human beings could contribute to the ZNGA price, not just trading algorithms.
Good point. But if you were a ZNGA owner who wanted to buy FB at a lower price than the expected one, you would know that as soon as the FB price was lower than expected, the ZNGA stock would slide (as everyone was using it as a proxy). Subsequently, unless you sold within 2 minutes of the FB price being known, it wouldn't be a good strategy (as you would end up loosing money on the ZNGA sell).
That said, as long as you acted fast enough, that strategy was win-win. Either FB stock was too high and ZNGA rose too, or FB was affordable and you could quickly change to that, before ZNGA fell.