RAIN put options
Well, it is now safe to say that the Aug 5 puts
on RAIN have finally expired at zero value and it is
interesting to consider some of the consequences of the
Aug options expiration
*The company likely had to wait until this time, just in
case these puts came 'in the money' before expiration and
the put owners 'put' 400k shares back to RAIN to buy at 5.
This didn't happen, so it means at least two things. First,
the recent run-up in price was not caused by any stock
accumulation by the put owners, in order to 'put' shares
back to RAIN - this is good. Second, in order to honor the
share buyback, as RAIN were not presented with the 400k
shares due to put exercise, they will now have to go to the
market and buy these 400k shares directly, in the coming
days, weeks and months - this is also good.
* The Aug 7.5 puts expired slightly in the money, so it is
likely these will be exercised, meaning that RAIN will be
buying-back some 60k shares immediately at $7.50 (though
their net cost will be less, taking into account the money
they received for selling the Aug 7.5s) - not a huge buy,
but at least it's another 60k shares removed from
circulation.
FWIW,
Frank |
