I am new in option trading can you please give me some advice on this situtation I bought Mer call 2010 Strike 50 When Mer had reached $29.00 my call were trading at $2.00 to $2.15 After the merger announcement with BAC even thou the stock is at $29 the option seem to be acting very weird Bid 0.35 and asking $1.25 What just happend to the option
You no longer have an option to buy MER stock. You own an option to buy BAC stock. How many shares can you purchase by paying the strike price, or $5,000? As many shares as the owner of 100 shares of MER gets in the merger. This option has very little value because the chances that BAC can rise anywhere near that value is essentially zero. Mark http://blog.mdwoptions.com/options_for_rookies/