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Post by babaoriley on Oct 4, 2017 22:28:57 GMT -5
Finally, after years of reading this blog I have something to share! This morning I asked my broker a similar question regarding my pre-reverse split 200 January 2018 $1.50 calls that are now valued at $0.04 as "adjusted" options. I was expecting my 200 contracts to be reduced to 40 (5 to 1 split), but they kept it at 200 and reduced the number of options per contract from 100 to 20. So now I have 200 contracts on 20 shares per option. Today's ask was $0.04 per contract which seems really low. I guess the best actions would be to exercise the options and then sell the shares in January 2018? The following is the message I got from my broker: "Please note that the underlying deliverable of the options was changed; not the number of contracts held.
When a company processes a reorganization of their stock shares, such as a merger or stock split, this action may affect the outstanding option contracts for that security. When this occurs, the resulting contracts are referred to as "adjusted options”.
A standard option contract represents 100 shares of the underlying security. An adjusted option can represent more or less shares of the original security and possibly additional other securities and/or cash (depending on the specifics of the reorganization involved).
Your MNKD options now have an underlying deliverable of 20 shares per contract instead of 100.
Once an option has been converted to an adjusted status, it will typically not display a price online until that contract resumes trading.
Adjusted options cannot be purchased online. If you wish to purchase an adjusted option or need assistance in determining the underlying deliverable, please call your local XXXXXXX team for assistance. Adjusted option orders submitted by a broker will still receive the online discount commission rate ($6.95 + $0.70 per contract).
If you currently hold an adjusted option position in your account, you will be able to liquidate (or close) that option online without broker assistance."
Any ideas why is the value of these adjusted options so much lower than the regular options?
Look at it this way, nordy, your $1.50 pre split price calls could now be looked at as $7.50 calls for January 2018. I don't know if MNKD is trading calls for that price (hey, they might now), but what would you expect a $7.50 call on a $3.50 stock to go for, with only 3 months to go till expiry? A dime? Maybe. Just checked, the Jan 2018 $5 strike last sold for .31, so you can see that if there were a $7.50 call, which there apparently is not, .07 to .10 would be a fair guess. |
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Post by radgray68 on Oct 4, 2017 23:12:43 GMT -5
All I know is I can’t sell mine at a loss because they aren’t trading. No one will buy them:-( I sold all my old options when they announced they were going to split so I can't help you there. However, I do know that if you dangle a fair enough profit out there, somebody will come along and take it off your hands. Your broker, perhaps, but I think there are clearing houses that do these types of investments. Once the price levels out, you might want to try putting a GTC order in with expiration a few days out. You may have to take a few, or even up to a 5% hit below the going price, but give it some time, somebody else's greed will win out. Limit orders only, like DB said. If they only sell part of your order, I've had good luck dropping the price by a penny or two to get it done. Too cheap, though, and you might as well exercise the options, call in the shares and let your broker worry about the arbitrage. GLTY |
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Post by babaoriley on Oct 5, 2017 9:36:33 GMT -5
"Too cheap, though, and you might as well exercise the options, call in the shares and let your broker worry about the arbitrage. GLTY"
Noooooooooooooooooo! Would not be a good idea to exercise an option to buy, you'd be buying for way over market. If the stock got above $7.50, then it might make sense to exercise. Caution, it's early and my brain may not be working properly, but as soon as Sports gets off work, she'll confirm or correct!
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Post by radgray68 on Oct 5, 2017 11:01:16 GMT -5
"Too cheap, though, and you might as well exercise the options, call in the shares and let your broker worry about the arbitrage. GLTY" Noooooooooooooooooo! Would not be a good idea to exercise an option to buy, you'd be buying for way over market. If the stock got above $7.50, then it might make sense to exercise. Caution, it's early and my brain may not be working properly, but as soon as Sports gets off work, she'll confirm or correct! I'm not sure of the strike price of the options she holds, but the strike is the strike. If she can't sell the options due to lack of liquidity, then convert them to shares, which are very liquid right now. I think my guys charge $19.99 to exercise the options so I guess I don't understand why not if you want out of the non-standard options. |
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Post by oldfishtowner on Oct 5, 2017 11:57:12 GMT -5
For those holding pre-split calls: Just checked my account and my old $1 Jan2018 calls are in the black. They increased in value $1620 today and the current quote given was $0.20.
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Post by compound26 on Oct 5, 2017 13:42:05 GMT -5
Sold a bunch of the pre-split Jan. 18 calls today as I do not want to deal with them any more (approaching expiration date and not actively traded). $1 calls at $0.31 and $1.5 calls at around 0.11-0.15.
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Post by dreamboatcruise on Oct 5, 2017 13:49:32 GMT -5
"Too cheap, though, and you might as well exercise the options, call in the shares and let your broker worry about the arbitrage. GLTY" Noooooooooooooooooo! Would not be a good idea to exercise an option to buy, you'd be buying for way over market. If the stock got above $7.50, then it might make sense to exercise. Caution, it's early and my brain may not be working properly, but as soon as Sports gets off work, she'll confirm or correct! Hopefully a trading platform would scream at you if you tried exercising out of the money calls... though perhaps the split would confuse it. |
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Post by oldfishtowner on Oct 5, 2017 13:51:53 GMT -5
Sold a bunch of the pre-split Jan. 18 calls today as I do not want to deal with them any more (approaching expiration date and not actively traded). $1 calls at $0.31 and $1.5 calls at around 0.11-0.15. After what we have seen today, I believe the stock has a good chance of reaching $10 before the Jan 2018 calls expire. We just need another announcement of good news - a partnership, a successful STAT trial, accelerating scripts, a couple of analyst upgrades, etc. I'm holding out a little while longer. |
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Post by compound26 on Oct 5, 2017 14:18:53 GMT -5
Sold a bunch of the pre-split Jan. 18 calls today as I do not want to deal with them any more (approaching expiration date and not actively traded). $1 calls at $0.31 and $1.5 calls at around 0.11-0.15. After what we have seen today, I believe the stock has a good chance of reaching $10 before the Jan 2018 calls expire. We just need another announcement of good news - a partnership, a successful STAT trial, accelerating scripts, a couple of analyst upgrades, etc. I'm holding out a little while longer. Yes, totally agree. I am holding my core positions and also added some $4 Jan. 19 calls yesterday. Just do not want to deal with these pre-split ones anymore. I also have some Jan. 18 $2 and $2.5 calls that I am holding on and not selling. |
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Post by sportsrancho on Oct 5, 2017 14:33:44 GMT -5
Yes! I’m in the green with my 2018 1.50 pre split options!
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Post by alethea on Oct 5, 2017 14:38:10 GMT -5
Yes! I’m in the green with my 2018 1.50 pre split options! Good for you Sports! Can't think of anyone else I'd rather see that happen to! (Except for me of course  ) This has been a really fun day. And thank you too Pepster, I've greatly enjoyed this Wacky Wave of yours or whatever you're calling it. |
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Post by op2778 on Oct 5, 2017 14:43:27 GMT -5
Yes! I’m in the green with my 2018 1.50 pre split options! Are u going to close them? Closed my $0.5 pre split when stock was at $6.3..... Still holding 200Calls $1 jan2018 pre-split..... Thinking to dump them....but i still think we can hit $7-8 and probably i'll regret..... Op |
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Post by mytakeonit on Oct 5, 2017 16:18:34 GMT -5
Yes! I’m in the green with my 2018 1.50 pre split options! Good for you Sports! Can't think of anyone else I'd rather see that happen to! (Except for me of course ) This has been a really fun day. And thank you too Pepster, I've greatly enjoyed this Wacky Wave of yours or whatever you're calling it. I think she started calling it an egg roll. |
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Post by straightly on Oct 5, 2017 16:22:45 GMT -5
Good for you Sports! Can't think of anyone else I'd rather see that happen to! (Except for me of course ) This has been a really fun day. And thank you too Pepster, I've greatly enjoyed this Wacky Wave of yours or whatever you're calling it. I think she started calling it an egg roll. With pepper. |
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Post by sportsrancho on Oct 5, 2017 16:30:22 GMT -5
Yes! I’m in the green with my 2018 1.50 pre split options! Are u going to close them? Closed my $0.5 pre split when stock was at $6.3..... Still holding 200Calls $1 jan2018 pre-split..... Thinking to dump them....but i still think we can hit $7-8 and probably i'll regret..... Op Yes, I’m think 7+ also. Then wait for some clarification ....yeah right:-). And then I’ll buy the 2020’s...I’m hoping on a dip. I’m just going to let my 2019’s ride till middle of next year. |
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