Gurus, What is the best way to determine the number of shares that is represented by an option contract? I'm looking at SEBL July put options and am thinking of initiating a 30 - 32.5 bull put spread. However, I'm not sure if the contracts represent the same number of shares. Please help!!! Thanks very much in advance.
Check the CBOE website and look under Splits & Mergers in the Trading Tools section. You can then lookup the affect of a specific split or merger on the related options. Not all option contracts represent 100 shares. Depending on the nature of the split or merger you can get some pretty oddball delivery specifications, e.g., 125 shares of XYZ plus $2.75 cash or 150 shares of XYZ and 45 shares of ABC. Here's a good example with WCOM options - the LDQ/WQM/VQM series now have delivery specs for 100 shares of WCOM and 4 shares of MCIT. The WQZ/DOJ series have specs for 150 shares of WCOM and 6 shares of MCIT (these were previously adjusted options that for the 3:2 split were adjusted to a delivery spec of 150 shares - so when the MCIT stock dividend occurred, they now also include 6 shares of MCIT instead of only 4). Very important to check the contract specs - you definitely can NOT assume each contract is just for 100 shares.
Thanks so much for the pointers, AA & CK....sure helped me! The only minus with the CBOE's trading tools is it doesn't offer a search feature which would allow me to look up a particular stock..I would have to look through all the bulletins. Too bad, I guess. Thanks again.