Short Puts and Takeovers

[Smallprofits]

I was hoping someone could assist me.

I have sold June 2011 $38 ASX PUT options

I am wondering the effect of the potential merger with SGX.

- Assume the merger goes through in current form then would this option contract expire worthless?


- Another scenario: say a company was going to buy out ASX for cash @ $48.00 per share would I be right in saying that the options would also expire?

- What it the buy out price was $36.00 where my PUT options which I have sold are $38.00 ? what would be the effect then?

- whats the process if a company enters a trading halt/merger etc before my options have expired?

Thanks, appreciate your assistance.

 

[sails]

Smallprofits, suggest you check the ASX website for information on how ETOs will be handled in the event of a merger. Here is a link to their web pages to keep an eye on for information:

http://www.asx.com.au/products/options/corporate_actions_and_notices.htm - and follow the links from there.

If you scroll down on the following web page, you will see how Lihir Gold options were treated when merging with Newcrest. That might give you some understanding of the process.

https://www.asxonline.com/intradoc-...tionID=839&SortField=xCircular&SortOrder=Desc