Options on a company facing delisting

Discussion in 'Options' started by lesserfool, Oct 7, 2014.

  1. I am considering selling OTM calls on a company that has just declared bankruptcy. From what I understand, it is normal for such a company to be delisted and move to the pink sheets in the next several days.

    Curious, are there any special risks in such a strategy, beyond the usual uncovered call? For example, can a judge halt trading and then the option holder call the shares? That is just an example. Wondering if there is more I haven't thought of.

    Thanks for any insights!
    -lf