Why not sell the puts if you know a buyout is coming? In that event they will never be exercised and the put-writer pockets the premium for the puts. To whoever put on this spread, selling the puts was a way of reducing his cash outlay. Both halves of this spread are bullish, but the options trader may or may not know of a coming buyout. If he doesn't, its simply a gamble with a potentially big payoff for a huge move higher. If he does, he's trading on inside information, an illegal operation.