SI
SI
discoversearch

We've detected that you're using an ad content blocking browser plug-in or feature. Ads provide a critical source of revenue to the continued operation of Silicon Investor.  We ask that you disable ad blocking while on Silicon Investor in the best interests of our community.  If you are not using an ad blocker but are still receiving this message, make sure your browser's tracking protection is set to the 'standard' level.
Strategies & Market Trends : How To Write Covered Calls - An Ongoing Real Case Study!
 Public ReplyPrvt ReplyMark as Last ReadFilePrevious 10Next 10PreviousNext  
To: Ron who wrote (9888)3/7/1999 10:15:00 PM
From: VincentTH  Read Replies (1) of 14162
 
Ron,

Re: The new contracts will have the same strike price as the old one, except that the number of shares per contract and the strike prices are adjusted according to the conversion ratio.

I was called to do some "honeydo"'s so I did not have a chance to proofread my post. What I meant to say was:
There are 3 cases:
1. Conversion involves no cash, and conversion ratio is straight (like 2 for 1), then this is the simplest case: You get 2 new contracts for each old contract.
2. Conversion involves no cash, and conversion ratio is some odd number like each CDG share is worth 1.7 FLC share. For this case, a CDGEE (CDG May 25) is converted to a DXGEE (DXG May 25) with a face strike price of 25, but the actual strike price in terms of FLC price is 25/1.7 = 15.88, and the contract is for 170 shares.
3. If the merger envolves cash, say each DEC share is exchangeable for 1 CPQ share + $20.00 (the actual ratio and cash amount is something like 0.95 + some odd cash), then if you sold DEC calls, you are to deliver $2000 for each call you sold if the call buyer exercises the option.

The CBOE used to have a mailing list that they announced everyday when there is a split or a merger that takes effect, and how that would affect the calls. Since I moved from a Unix SMTP account to a (gasp) M$ Exchange account, I have lost the subscription, and I don't know how to resubscribe to it.

Hope this answers your question.

//V
Report TOU ViolationShare This Post
 Public ReplyPrvt ReplyMark as Last ReadFilePrevious 10Next 10PreviousNext  

HomeMailHotSubjectMarksPeopleMarksKeepersSettings
Terms Of UseContact UsCopyright/IP PolicyPrivacy PolicyAbout UsFAQAdvertise on SI
© 2025 Knight Sac Media.  Data provided by Twelve Data, Alpha Vantage, and CityFALCON News