Is there a strategy you can use when a stock is getting bought out? Usually the day traders will only focus in on it as the deal price, or at least the bid price for the company is known. Generally the price of the stock will hover just under the bid price and trade around that for the day. This leaves the day trader with a zone that he can work with and "scalp" during the day of the announcement.
For the rest of the world, usually they avoid it. If the deal price is known, lets say its $50 per share, then the price will usually stay just under that price until more news comes out. If other bidders offer more for a company then the price will rise to their bid. So if a company offers $55 for the same company you can expect prices to rise to around that level.
One thing that the options traders do is covered calls, or buy writes on the day that the deal is announced. If a company makes a bid to buy a company for $50 and the price moves right to that level then one can buy stock and sell calls at that closest strike. So, for example, prices may be around $49.60 or so. One can buy stock at that price and sell calls at the $50 strike in the front month.
The risk? Not much right? Maybe another bidder comes in and offers more for the company in which case you would max out your win on your covered calls. The only thing that could cause a decline in prices is if the deal falls through or turns out to be a rumor that is unconfirmed.
The reward is not going to be very large though as many of the quant firms will be doing the exact same thing. Just a small profit for a limited risk trade. If you look at this trade on a stock that has a pending bid you will see tons of volume at the strike price closest to the bid price. This is this trade taking place. A good, current example of this is the Amazon
