I hope it's the right forum, I'm new to options and maybe someone can help me understand the following: SYNGENTA is bring acquired for $93.5 and de-listed on June 2017. Why the put options are traded so high. for example Dec 15 '17 $90 Put SYNGENTA AG SPONSORED ADR is traded for $4. Does it mean that if I sell Put now for $4 in few weeks when the company de-listed actually the option will expire worthless and I'll keep the $4?
there are probably much better answers here from risk arb traders but off the top of my head 1) make sure the quotes are legit and not stale 2) is this a done deal? or is it still subject to contingencies that might blow up the merger? 3) make sure you know the detailes of the merger inside and out....the guy paying $4 for that put probably has far more experience than you so be careful.
thank you for your reply, see below: 1. the quote is legit, i gave one example but there are many like that for this stock. 2. this is a done deal approved by 92% of stock holders already and formally announced final settlement on June 7th 3. I have a feeling I miss something because it looks too good. I read everything, but couldn't find why someone will pay $4 for few weeks at that price.
It has something to do with the terms of the acquisition. My guess is the terms are not an all cash deal but some combinations of stocks of the acquiring company and cash? If so, then the puts will be converted to some combination of cash + options of the acquiring firm. Ask your broker's options department about how the options are to be converted. They should know. This happened to my options for Kraft when it was acquired by Heinz.
Is there size at $4 bid? If there is and it gets taken out and there is size bid at $3.95 then watch out.. I wouldn't touch it w/o knowing the fine print ... Like Ironchef said!
For Put Sep 90 there was a bid for $4 now bid is $3.2 still very high. put 85 is $2 also very high, but all doesn't match any model that I know. I read the entire deal, it is all cash, already approved, couldn't find any fine print. I won't touch because I'm afraid, but I really want to understand the reason for this price.
It is all cash and it's a done deal. I will say there is a catch for the options however. If you can't find it, you shouldn't be trading them.
If you really care, here's the buyout docs, 70 pages of light reading and that's before the dozen or so amendments. https://www.sec.gov/Archives/edgar/data/1123661/000119312516514057/d134186dex99a1i.htm Here are the rest of the company's filings. https://www.sec.gov/cgi-bin/browse-...1&type=&dateb=&owner=exclude&start=0&count=40