'kkozkkoz' pid='76590' datel Wrote:I'm not sure but I wonder if the closing price plays into the repricing of any options outstanding. I believe since the CRP won't be part of the adjusted option contract, the new option might be 45 dollars of exxon stock plus cash. I'm hoping that's the case as I have a few Jan. 50's.
If I can exercise the option in January and get cash plus Exxon stock which has appreciated I'll be pleasantely surprised. I guess I'll find out shortly when the new adjusted options are created.
A January 50 call will not be pleasant to own the day after this deal closes. Here is what happens. As it now stands, that call is in the money whenever the value of 100 shares of IOC is above $5,000 (100 shares X $50 strike). That call will become a non-standard option which gives you the right to 'control' roughly 53 shares of XOM (depending how the 10 day VWAP works out). So, today's XOM price ($83.24) times 53 shares equals $4,411.72. So, when you had IOC shares you were in the money by about $40 ($50.40-$50.00 X 100shares) BUT now you are out of the money by $588 roughly!!! Why ? The Options Clearing Corp (or more correctly the options brokerages houses that populate the committee re options adjustments) in their wisdom have decided to give you zip/nada/zero for the value of the CRP. They have thus swiped at least about $5 dollars per share from your option. Better yet, they have "given" that value to holders of PUTS - in this case $50 strike puts will become more valuable. Really a travesty of fairness in the options market if you ask me (but nobody will !!)...
Bottom line - get the "in the money" value out of the options by selling them now (before the deal closes), OR, exercise them before the deal closes (and sell the IOC shares (assuming IOC is above $50 of course).