What this is (and isn't)
This is a hindsight walkthrough of one specific, already-closed deal — not a strategy backtest across many deals, and not proof this approach works going forward. It shows what a disciplined spread-threshold trader COULD have done with real prices that actually occurred, using entry/exit rules set after seeing the whole series. That's a meaningfully easier problem than trading it live.
CWAN's spread only widened once in its ~6-month life (Feb–Apr 2026, coinciding with an RBC Capital downgrade citing the fixed deal price). Most of this deal's life was a tight, boring 1–2% spread. "Many trades" isn't what the real data shows for this particular name — two trades is.
Deal terms
Spread over the deal's life
Where a spread-threshold trader would have acted
Rule used: buy when spread widens past ~4.5% (real deal-risk repricing, not noise), sell when it compresses back under ~1.5% (spread mostly captured). Applied to actual daily closes.
| Date | Action | Price | Spread | Why |
|---|
$1,000 position, two scenarios
Trade 1 proceeds fully redeployed into Trade 2 (compounded). No fees, slippage, taxes, or bid/ask spread modeled — small-position retail trades in a liquid name like this had real friction below these numbers, not above.
Why this deal specifically doesn't generalize
CWAN traded at 92%+ implied probability of closing for almost its entire life — this was a large, well-financed take-private (Permira/Warburg Pincus/Temasek, $8.4B) with no real regulatory overhang. The "re-entry" opportunity existed because of a single sector-wide SaaS multiple compression that also dragged an already-tight arb spread wider, not because the deal itself got riskier. A deal with real termination risk (financing contingency, antitrust review, contested vote) would show bigger, scarier, and much less profitable spread moves — including moves that never come back, because the deal actually breaks.