JQP,
Most of the calls are already worthless. The value of a contract to buy something worth, maybe $8-11 at a strike price north of that (15-120 dollars) has been obliterated. If I remember correctly and can explain clearly (2 big Ifs), when the companies do a stock merger, the strike price will remain the same on the ENE options, but the number of shares of Surviving Co. convertible will be adjusted (which explains part of the liquidity problem--you'll now get to pay $20 to buy not 100 shares but 62.3 shares or something like that).
I shouldn't say that the calls will be worthless, but when I look at the ENE option chains, the vast majority of calls "trade" at zero offer and 5 or 10 cents ask. Obviously, some calls will linger in the money, but a quick look at the at or near the money chart reveals almost no options, given the vast numbers outstanding.
quote.cboe.com
Remember, too, that the fate of the ENE euqity (including options) is now in Dynergy's hands, and Dynergy (the Surviving Co.) tugboat might get swamped by the legal wake from the leaking ENE supertanker. The number bruited about this morning is $8 billion in DYN stock for ENE, which comes out to about $10.67 per share. But the currency of the deal will be DYN stock, which can go south. Which far out ENE calls do you own?
Kb |
