Not necessarily. Arbs will short a takeover stock and sell call options against it to win both ways. Some will sell puts to win both ways. Think about it. If you short a stock with announced takeover price, your risk is limited to the take-over price unless there is a white Knight. You can get your money upfront by selling calls against your short position. If the deal gets done you lose nothing since you already have been paid. If the deal falls apart, you profit. Another thing that Arbs do is to puchase put opitions on their positions to make sure the deal doesn't lose them money. Normally I would run from a large short position, but not in this case. One problem with this arb strategy is if a large buyer plays the thin float to squeeze out the shorts. Imagine if some large hedge fund manager began to squeeze this stock...they could quickly run the stock up above the announced takeover price causing rumors to fly about a white knight. 14 days to cover could be very interesting indeed!