Ad hoc dividend ATVI, strike price adjustment?

Discussion in 'Options' started by trade4succes, Jul 20, 2023.

  1. On July 19, ATVI has announced a non-scheduled dividend prior to and not contingent on the closing of the transaction (meaning Microsoft taking over ATVI for $95 a share) https://seekingalpha.com/news/3988687-activision-blizzard-inc-declares-missing-dividend.

    Being short a call at the take over price of $95 expiring after the ex-dividend date of August 1, this dividend could effect me. The price of the stock might temporarily rise over $95 before this date to get the dividend and I might get assigned, even if everyone expects the deal to eventually close at $95.

    I thought in cases like this, the strike price of effected options would be adjusted https://www.investopedia.com/terms/a/adjustedexerciseprice.asp. I haven't heard anything from my broker IB, nor have I been able to find anything about this. Also, weirdly, the price of my short option has hardly budged over this news.

    Anyone know anything definite about this situation or where to find it, or should I just assume that, since I haven't heard anything, there is no strike price adjustment?
     
  2. ETJ

    ETJ

    Cash settlement is a $95.00 per share price. The memo is old, but appears to still be relevant.
     
  3. Yeah, the dividend doesn't change the cash settlement price.