Anonymous
Anonymous asked in Business & FinanceInvesting · 1 month ago

What Happens to Put Options if the Company Is Bought Out?

1 Answer

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  • 1 month ago

    The option contracts are adjusted to require delivery of the same thing the owner of 100 shares of the company received if the option is exercised.

    Example:

    I had a put ratio spread on CompUSA stock when it went private paying $10.10 per share for owners of CompUSA stock. The options were converted to cash settled options. If I had exercised my long options I would have had to pay $1,010 for each option I exercised. If I had been assigned on my short options I would have received $1,010 for each option contract.

    For a more complicated adjustment see

    https://www.cboe.com/framed/pdfframed?content=/pub...

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