Hello, I wonder about if you would buy 1 PUT on VXX (18 JAN 2019) with 610 days to go. As VXX is going down and we assume that this happens until 2019. What is the risks in this. For example if we buy 1 PUT today with VXX at: 15.74 and the VXX does a reverse Split 4 to 1 in a few days, so the price of VXX is about 60.00. What happens in this case to the PUT, how will the PUT be valued and are there any other risks with holding the original PUT?
Noticed you have asked several questions regarding VXX that can easily be found using google. I literally typed 'vxx reverse split options' and the answer is in the first result: https://sixfigureinvesting.com/2013/08/next-vxx-reverse-split/
Yes I have red that page just before asking the question but I feel that I am still not sure exactly. I will paste some sentences from that page first: a-g below: .............................................................................................................................................................................................................................. Questions: (In this example we are only long a PUT (We don't have any shares at all in VXX) 1. If I understand. After the split the PUT will now have VXX1 as the underlying symbol and not the VXX. Now I wonder what kind of symbol is this and for how long will this symbol exist? 2a How difficult is it to sell the PUT in VXX1 in this scenario. What could the liquidity be here when this happens and should I sell the PUT and buy a new PUT in VXX because we should see VXX1 as a temporary symbol after the reverse split? 2b. Will VXX1 go down in the same way as VXX does. For example if VXX goes down 10%, will VXX1 also go down about 10%. Are they correlated? 3. As said in "g". I wonder VXX1 is now the underlying for the PUT option but if I exercise the option, it is true that I get SHORT 25 shares of VXX at price $37.2? There are 2 things I wonder about here: a) My strike price is still $10. If I exercise the option, I will be SHORT 25 shares. Now I wonder will I be that at $37.2 or $10? Because normally I would be short shares at the strike price of $10? b) The VXX1 was the underlying now and not VXX but it is still true that I get 25 shares of the VXX? I feel that I need to be 100% clear of this? Thanks!!