RINO delisted, what happens to my put options?

not complicated. what they are saying is that the price will be set at the pt. which most favors the market maker/ members of the exchange.

 

DATE: NOVEMBER 19, 2010

SUBJECT: RINO OPTIONS - TRADING HALT/EXPIRATION PRICING CONSIDERATIONS

OCC STRONGLY RECOMMENDS CLEARING MEMBERS CONTACT ALL HOLDERS OF EXPIRING RINO OPTIONS TO APPRISE THEM OF THE CONTENTS OF THIS MEMO.

The OCC has been informed that trading in RINO International Corporation (RINO) Common Shares was halted on NASDAQ Global Select on November 18, 2010.

MEMBERS SHOULD ADVISE THEIR CUSTOMERS TO TAKE THE FOLLOWING CONSIDERATIONS INTO ACCOUNT IN DECIDING TO EXERCISE, OR NOT TO EXERCISE, THESE OPTIONS.

RINO Option Exercise

There continues to be no OCC restriction on the exercise of RINO put and call options, and OCC does not currently anticipate imposing such restrictions. RINO Expiration Exercise Procedures

November series of RINO options expire November 20, 2010. For purposes of calculating a price for use in expiration processing, OCC will use the last available RINO price of $6.07 from November 17, 2010. OCC anticipates expiring RINO options will be processed in the normal fashion this weekend, including the use of the customary in-the-money thresholds to effect exercise of expiring RINO positions.

CUSTOMER EXERCISE INSTRUCTIONS

Clearing Members are reminded that exercise thresholds are employed by OCC in expiration processing solely as an operational convenience, as described in interpretation .02 to OCC Rule 805(d): “The exercise thresholds provided for in Rule 805(d) and elsewhere in the rules are part of the administrative procedure established by the Corporation to expedite its processing of exercise of expiring options by Clearing Members, and are not intended to dictate to Clearing Members which positions in customer’s accounts should or must be exercised.”


Clearing Members should remind customers of their obligations to submit exercise instructions before expiration, as described in the Options Disclosure Document “Characteristics and Risks of Standardized Options”: An option holder who intends to exercise an option before expiration must give exercise instructions to his brokerage firm before the firm’s cut-off time for accepting exercise instructions on the last trading day before expiration. Many brokerage firms accept standing instructions to exercise, or have procedures for the exercise of, every option, which is in the money by a specified amount at expiration. These procedures often incorporate by reference OCC’s administrative procedures that provide for the exercise of every option that is in the money by a specified amount at expiration unless the Clearing Firm carrying the option in its accounts instructs OCC not to exercise the option. Investors should determine from their brokerage firm the applicable cut-off times, the firm’s procedures for submitting exercise instructions, and whether any of their options are subject to automatic exercise. Investors should also determine whether the exercise of their options is subject to standing instructions of their brokerage firm, and, if so, they should discuss with the firm the potential consequences of such instructions.”

 

And Regis, my final answer is:

Note that for November they used a final price of $6.07 for settling options. If that's still the case, you're sh*t out of luck for the Dec 5's. Happy trails...

 

"November series of RINO options expire November 20, 2010. For purposes of calculating a price for use in expiration processing, OCC will use the last available RINO price of $6.07 from November 17, 2010. OCC anticipates expiring RINO options will be processed in the normal fashion this weekend, including the use of the customary in-the-money thresholds to effect exercise of expiring RINO positions."

is this what actually happened?

 

What if you sold a load of put options and then got the stock delisted. Isn't that like free money?

 

Even if the options weren't auto exercised, you could still request to exercise your puts even if the are "out of the money".

 

What else can they do other than take the last price of the underlying when the puts expire?

 

Absolutely! At expiration, you collect your money from the leprechauns who run the CBOE.

 

And you would want to exercise "out of the money" puts why ???

 

Because you would expect them to be "in the money" when the stock begins to trade. By exercising the Nov 5 puts you are selling the stock for $5. Even though the last trade is over 6, one might be happy to sell it for $5 after this news came out.