Trulla, I received an answer. I'm not going to be rolling any sold Put contracts, but I'm going to ask another question for this is getting interesting.
For everyone's information, When you sell a Put it's at a strike price, if the stock is trading higher than that strike price, you get to keep the money you received when you sold the Put. A Put is a Promise that you will buy the underlying shares at a specific price, or the Strike Price.
Here's my answer from TD-A, I'm still thinking about my next question. I cleared the fellow's name that answered me.
Good question. Any material change to a stock, like a spin-off or split must be accounted for in the option contract. I do not see an official memo in the Option Clearing Corporation website yet, theocc.com. So in general terms, the existing contracts prior to the spin-off date will change their deliverable. If the spin-off is indeed 1:1, then I would expect the adjusted option contract to now deliver 100 shares and 100 shares of the spin-off shares.
Any time there is a change to an option contract, it is to account for the new conditions so that no one benefits or is hurt by the change. It is all accounted for in the new contract deliverable.
Thanks.
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Original Message Follows:
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Greetings:
AMC has announced a 1:1 spinoff with an ex-date of 08/22/2022, I have sold a number of AMC Puts at various strikes, how will these Puts be affected by that spinoff.
I understand that my current positions expire prior to ex-date; however, I have a history of rolling via the thinkorswim platform, I'd appreciate an answer to my concerns ASAP.
Thank you,
