Let's say I have done research and have a view that a public company's stock will go down due to worsening fundamentals. So normally then, one can express that view by shorting the stock. However, there's a risk that the company could get bought out and could gap up 40% overnight.
Is there a way for me to buy a relatively inexpensive hedge that would only pay me if the stock jumps up very rapidly (e.g. due to an acquisition), and wouldn't pay me if the stock goes up gradually? I'm wondering if there's some options strategy that can do that.
If there is, then I could potentially then use that options strategy to hedge the short position. Does such a thing exist or can it be constructed somehow?
I'm aware I could buy an out of the money call option as a hedge, but that's going to be more expensive since it would pay me even if the stock goes up slowly, and I'm only trying to hedge against the scenario that the stock jumps up a lot very quickly due to an acquisition.