APRIL 28, 2020 - 12:14 PM EDT MIAX Exchange Group - Options Markets - Corporate Action Alert: United States Oil Fund, LP (USO) United States Oil Fund, LP (USO) has announced a reverse stock split effective for Wednesday, April 29, 2020. On that date, the current USO option class will change to USO1. The MIAX Options Exchange, MIAX PEARL Options Exchange and MIAX Emerald Options Exchange will not list USO1 options. Therefore, no options on USO will be available for trading on Wednesday, April 29, 2020. United States Oil Fund, LP (USO) will resume trading on the the MIAX Options Exchange, MIAX PEARL Options Exchange and MIAX Emerald Options Exchange on Thursday, April 30, 2020. All GTC orders resting on the MIAX order books in USO will be canceled at the close of business on Tuesday, April 28, 2020. Additional details about the United States Oil Fund, LP (USO) reverse split are provided in the attached OCC Memo. Please contact MIAX Options Listings with any questions at Listings@MIAXOptions.com or (609) 897-7308.
Ok, so I hold like 3 way OTM shitty USO contracts I bought like 4 months ago. What does a reverse split mean for my contracts?
They'll be renamed to "USO1" options and will be illiquid as only MMs will be able to buy them from you. The underlying will be 12.5 shares of "new" USO instead of 100 shares, though you'll be able to check the price of the previous underlying as "USO1" for reference. Often it'd be a good idea to close them before (reverse) split and re-open new positions after (reverse) split. But probably not in your case when they're barely worth anything.
No, this is just math calculation due to 1:8 reverse split, which means an option would control 1/8th of the new higher-priced shares that previously were 100 shares. I'm actually not sure what would happen upon exercise of such option. Possibly you'd get 12 shares +/- some cash (?). Or possibly the price and/or strikes of options would be adjusted post-split to reflect this. Unless someone else knows, we'll see some details after the reverse split.
Option holders will have .125 the number of options they had before the split, is that right? Do the strike prices of options bought before the split remain the same? Or do the number of contracts held remain the same but the strike moves up 8X?
Option holders will have the same number of options with the same strikes, just on the “old” underlying (USO1), or 1/8th of the “new” underlying, so 12.5 shares of new USO vs 100 shares of old USO1. See above.