LOIs - The Source of and How to Play Many Buy and Hold Stocks

Letter of Intent (LOI)
What Does Letter of Intent - LOI Mean?

 An agreement that describes in detail a corporation's
  intention to execute a corporate action. The letter of intent is created by
  the corporation with its management and legal council, among others,
  and outlines the details of the action.

Letters of intent are used during the merger and acquisitions
process to outline a firm's plan to buy/take over another company. For
example, the letter of intent will disclose the specific terms of the
transaction (whether it is a cash
or stock deal).

What is the value of an LOI play? 

The value of an LOI play is potentially many-fold.  When an LOI has just been
released, a stocks pps will normally spike up on the news of such said intention
to merge or acquire another company.  Playing the LOI news as a day trade
can be very profitable if you're fast enough to get in and ride the initial pop.

However, many LOI's these days are also giving time frames for when the
finalization of their stated intention is anticipated to take place.  That means,
as that time approaches, you can jump back into the trade and make
more profits as the follow-up news is released.

That's one option... Here's another one:

Recent plays like CNUV have afforded several opportunities to book profits
since the initial LOI was released stating their intention to acquire Freya
Industries.  In fact, as of this time the acquisition is not yet final, yet there
have been several PRs updating shareholders on the progress of the
acquisition and these updates along with the expected finalization have driven
the stock price from around .0024 to past its previous 52 week high of .0066
to a new 52 week high of .0074.

When news is released regarding the finalization of the acquisition, then
another run will take place, at which point, it would be advisable to exit
the trade.

So, the second option is to hold the stock all the way through the entire
process.  But, be aware that this may mean holding for months.  On the
other hand, it may be only a few weeks to less than a month, depending
on the situation.

If you pay enough attention, you can enter and exit the trade several times
during the process and make money each time.  That is up to you and
will depend on your personal trading style.  Neither method is wrong.

Where Do You Find LOI Plays?

Great question... many answers... here's a few:

- News releases
- Other Ihub boards
- Other resources / chatrooms on the internet
- Equity Feed type news feeds*

  * Equity Feed has a phenomenal news feed that allows you to use filters by many
     different factors, including keyword (such as, LOI, Letter of Intent, Merger, etc.),
     volume, price, etc.  And, it's in real time.  In my opinion, it is the best source for
     fast, fresh information.  In fact, anything that you get anywhere else probably
     originated from there.

    If you don't have Equity Feed and you're interested...

    http://www.equityfeed.com


This information was taken directly from the ibox on my board at Investor's Hub...

http://investorshub.advfn.com/boards/board.aspx?board_id=3676