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Strategies & Market Trends : How To Write Covered Calls - An Ongoing Real Case Study! -- Ignore unavailable to you. Want to Upgrade?

To: Ron who wrote (9888)	3/7/1999 6:21:00 PM
From: VincentTH	Respond to of 14162

Ron, This has happened to me with CDG --> FLC. What happened was your NSCP contracts are converted in terms of new AOL contracts, on the day the stock conversion becomes effective. So, under AOL, you will see a new series of contracts (Calls & Puts) with different root symbols. I don't know which letters they'll use, but take a look at FLC. The ordinary FLC contracts are FLCxx, and the converted CDG contracts are DXGxx. 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. Hope this helps

To: Ron who wrote (9888)	3/7/1999 6:28:00 PM
From: Herm	Respond to of 14162

Hope Vincent's reply answers your question for now!

To: Ron who wrote (9888)	3/7/1999 10:15:00 PM
From: VincentTH	Read Replies (1) \| Respond to 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