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alsol

Member since: Mar 08
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Posted May 18, 2009 (11:19PM)
What happens if one has an option contract on a stock, and then this underlying stock is bought by another company. So is the case with Wyeth (WYE), which is on the process of being bought by Pfizer. Does the stock option contract remains intact, is liquidated, or is forfeited?
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OldFart

Member since: Jun 08
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Posted May 19, 2009 (01:10AM)
In general options are adjusted based on the specifics of the deal - typical examples would be options are accelerated and expire or are converted into options of the acquiring company with adjusted strikes. It might be a good idea to check the Adjustment area of CBOE for examples
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alsol

Member since: Mar 08
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Posted May 19, 2009 (03:18PM)

OldFart said: In general options are adjusted based on the specifics of the deal - typical examples would be options are accelerated and expire or are converted into options of the acquiring company with adjusted strikes. It might be a good idea to check the Adjustment area of CBOE for examples

 Thanks!