Another market inefficiency Joel Greenblatt talks about in his first book is Merger Securities. Merger Securities are securities that are paid to the shareholders of a company being acquired, along with cash or stock. Merger Securities can include preferred stock, bonds, options, etc.
Similar to spinoffs, these securities are usually sold off by shareholders as soon as they're received. Suppose a mutual fund or index fund owns a stake in a company that gets acquired in exchange for cash, stock, and options. The mutual fund (or index fund) will probably keep the cash and stock, but will probably be forced to sell the options since they are not required to own such securities.
As with spinoffs, this puts selling pressure on the options and drives their price down to ridiculously low levels (and creates a buying opportunity for you).
To be honest, I've never invested in merger securities mainly because I have no idea how to look for them. Merger securities are almost never bought up when a merger deal is made, but when it is near closing and if the two sides can't come to an agreement, merger securities are offered to 'sweeten' the deal.
Because of this, it is very difficult to find merger securities since you have to follow the deal until it closes, and since their are hundreds of M&A deals every year, that can be a very difficult task. I don't know any service that provides information that would be a big help in looking for merger securities. If anyone does know, feel free to comment below.