AIG options question

Discussion in 'Options' started by marcoPolo21, Apr 19, 2011.

  1. Looking at the AIG May 11 Calls
    I see 2 separate $32 Strike contracts , and a Big difference in price.
    There are others like this for AIG, including some Puts.

    I'm sure there must be some simple answer.
    I'm very new to options, so can someone clue me in?

    thanks
    marc
     
  2. Whenever you see that it's because of an adjustment to the options from a corporate event such as merger, special dividend, spin off etc. In the case of AIG, I think there was a warrant spun off a few months ago. You can get specifics at the CBOE or OCC web sites.
     
  3. stoic

    stoic

    The AIG2 have a new deliverable per contract:

    1) 100 American International Group Inc. (AIG)

    2) 53 Warrants (AIG WS) to purchase 53 AIG common Shares.

    3) Cash in lieu of fractional .3933 Warants if any.


    For each share of AIG shareholders receive .533933 warrants. Each Warrant entitles the holder to purchase 1 share of AIG at $45 exercisable through Jan. 19th 2021.

    The unknown is the Cash in lieu. But with AIG at 32.12 x 100 = $3,212
    Warrents @ $9.88 x 53 = 523.64

    Total $ $3,735.64 divided by the multplier of 100 = 37.36

    So the 32 strike AIG2 are ITM by more than 5 points.

    See OCC Infomemo #28252