Non-standard options question
If I chose to hold a NS option to expiration, would it execute in the following scenario?
I buy puts at $6/sh strike. Reverse split is made 10:1 to $60/sh. Is the option considered "in-the-money" still if the new price is in the $30s?
If a company performs a stock split all options are invalidated. Why do you think no firms trade options?
but seriously
So you bought a put at 6 -> 60 due to a 10:1 reverse split - wouldn't it be in the money if it is below 60? and you purchased the stock above 60?
What am I missing? I don't know much about options
If I am not mistaken, OCC decides how things like splits are handled. In theory, every case could be different, depending on the circumstances. OCC publishes a memo where they tell you what happens.
From what I have been able to see, normally they would apply the multiplier to produce the underlying price for the new, after-split ticker.
Not sure about the US, but in Europe on corporate actions like a stock split/reverse split the strike and mutliplier are adjusted.
Example: http://www.theocc.com/webapps/infomemos?number=25968&date=200906
Thanks. I will check into the OCC to find discussion.
Then why did you chime in with gibberish?
The better question is, why not?
I guess some people enjoy looking foolish.
Each situation is unique as these are non-standard options. As indicated above, check with the OCC.
Generally speaking your old option is replaced with a new option (new ticker, etc) such that the new terms that represent the same economics as before the CAX. In your case, yes you'd be ITM.
Thanks HF guys. I just checked the OCC and I believe I should be good b/c the new option (ABC1) is now .10 (ABC). So if the stock is at $35, it's simply $3.50 or higher and I'm in the money for puts, right?
Oh oh oh, pls don't think me rude, but I have to ask (you don't have to answer)... This isn't the National Bank of Greece we're talking about here, is it?
The puts are ITM while spot
No, good guess though. That was a candidate of mine for a while, but I never pulled the trigger on it.
Perfect. I did realize the valuation isn't proper though. I'm being discounted for having the NS option. So I'm thinking about holding and executing.
Anyone have some insight on the value of the options if they are ITM, but non-standard? As I mentioned, I'm easily in the money right now, but the value of the standard option ($60 strike) is far greater than my $6 NS option's value, at least according to how it is being traded.
Should I just hold and execute?
bump
V hard to tell w/o more specific info...
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