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Strategies & Market Trends : Options for Newbies -(Help Me Obi-Wan-Kenobe) -- Ignore unavailable to you. Want to Upgrade?

To: BILL WAGNER who wrote (758)	3/7/1998 1:05:00 PM
From: Madpinto	Respond to of 2241

How does the spin off affect my options This is a very good question. First of all, you need to call the CBOE at 1-800-OPTIONS and ask them if the strikes will be adjusted for the spin off (and what that means if you don't know). Also, ask them your question. They have more knowledge and information on this situations than I do. I will answer to the best of my knowledge, but you need to verify any information you read here. A spin off works like a special dividend. The company gives up a part of itself to the share holders. This usually makes the company worth that much less. You may have noticed how companies will trade down by the amount of the dividend the next day and the stock ticker will be "unchange" for the day. Sometimes with a special dividend, the option strikes will be adjusted downward to compensate for change in the company's value. If this does not happen, your puts should be more valuable than they were before the news.