Question on Non-Standard Option

Discussion in 'Options' started by dartaceuk, Dec 13, 2008.

  1. dartaceuk

    dartaceuk

    Can someone explain a non-standard option that I mistakening sold.

    Sold 10 PUT Contracts on CIEN for Jan 09. Strike price is $5 for 3.90 a contract. I received $3,900. Unfortunately I didn't notice the option was non-standard until after the option was filled.

    Can someone explain this:

    +ZJBMA |
    $7.99 cash in lieu of shares, 14 shares of CIEN

    I'm not sure how to interpret $7.99 cash in lieu of 14 shares of CIEN.

    In a normal case I would not start to lose money until Ciena dropped to $1.10 but I'm not sure with this non-standard option.

    Thanks
     
  2. spindr0

    spindr0

    When they the reverse split occurred, the contract adjustment resulted in 14 point something shares being required for delivery (14.??). The $7.99 represents the cash in lieu of the fractional shares not in lieu of 14 shares. IOW, this adjusted contract now represents 14 shares plus $7.99

    You can get the specifics from the CBOE web site. Do a search on your option symbol and it should bring up the terms of the adjustment.