InterDigital Inc (IDCC)

[jealmc79]

“There are no dividends involved in this case. when you enact your options if they do not have the shares available will be short. The reason that this is done is to buy 1M shares without moving the market.”

There are 2 sides to each transaction so there are actually 2M shares in play here. To guarantee you get the 1M shares you would use the call you bought to get them. Then you could also be on the hook to come up with the cash to pay for 1M shares because of the put you sold. So essentially it would be 2M shares @ $79.65/share. Don’t know why anyone would be taking up this kind of position unless it was a prelude to a takeover.

The other side would have got the dividends on 2M shares, if any dividends were involved, and they weren’t short the stock. I don’t know if any of the transaction took place before the ex-dividend date or not. I haven’t even begun to figure out this side of the transaction or how they would make any money if they are short the stock or not.