Effect on Options when company is taken over

[crackaton]

Guys I know this is not the place to post this stupid question, but can someone please tell me what happens to options when a company is taken over?

 

[sails]

Re: Option Pricing- ACH margin prices 'Fair Value'??

Guys I know this is not the place to post this stupid question, but can someone please tell me what happens to options when a company is taken over?

If you go to the options page on the ASX website http://www.asx.com.au/investor/options/index.htm you will see under the heading of "Exchange Notices" there is a link to "adjustments" and another one "General Notices". As mergers and acquisitions can vary, it pays to find out from this site how the options will be treated.

You can also find out here how options strike prices and SPC (shares per option contract) may be affected by special dividends, capital returns, etc. I find it pays to check here from time to time to keep up with any changes.

As an aside, in the last few weeks they had a notice added to bottom of another page to say that RIO, CBA AND MBL will now have $1 strikes instead of 50c and then $2 strikes when over $80. Here is that link: http://www.asx.com.au/investor/options/index.htm

 

[RichKid]

Guys I know this is not the place to post this stupid question, but can someone please tell me what happens to options when a company is taken over?

Crack,

(I've created a new thread for you, you can always do this yourself if the topic/issue hasn't been raised before).

From what I've heard in the past the predator may offer to purchase them at the oppies at the current market value or allow holders to exercise them or some arrangement like that, normally part of the offer. Not really sure about all this.

Guess you'll need to distinguish between eto's and co issued options too.