The Merger Arbitrage Strategy involves taking positions in companies that are either currently or likely to be involved in corporate mergers and acquisitions (including but not limited to peaceful mergers, leveraged buy-outs, and hostile takeovers). Merger Arbitrage funds typically purchase shares in the company about to be taken over while selling shares in the acquiring company. Managers may employ the use of equity options as a low risk alternative to the outright purchase or sale of common stock. Most Merger Arbitrage funds hedge against market risk by purchasing broad market index put options (ex: S &P) or put option spreads.