Your scenario of 2:1 means JPM dilution in excess of 20%, and that's EXACTLY why a settlement won't be arrived at. No corporate board would agree to such a diminution of value. Uh-uh! Instead, look for a settlement in the range of 4 to 6 for 1. At 5.5 for 1 there's no diminution and the swap would just about = the $8 offer made by JPM prior to WAMU's seizure.
Also, you can probably bet that any settlement will involve RESTRICTED stock ... with proabitions on selling, transfering and trading for a period of 6 to 12 months.
With respect to the next Omnibus, I see only 4 possible scenarios:
BEST: no decision on the SJ AND no mention of it (as was the case on 11/24. This outcome would strongly imply that settlement negotiations were being finalized, and an announcement is imminent. Price will fall (no news is negative news), thus presenting the opportunity of purchase more shares at lower prices (just like 11/24).
2ND BEST: no decision, but judge says "it's coming ASAP". This will imply that negotiations have encountered stumbling blocks, and more time is needed to address them. Don't look for a settlement this year. But again, price will fall, presenting more opportunities to purchase additional shares at lower prices.
3RD BEST: the SJ is granted. This will imply that negotiations are at an impasses, forcing the judge to show her hole card. JPM will certainly appeal the ruling ... and we'll have closure of that issue 6 months out. Meanwhile, price triples, making future purchases of Q not as attractive as before.
WORST: the SJ is denied. Such a decision would make it impossible to speculate as to the status of negotiations. The judge has been forced to rule. The case is now in 'the ether'. Price will be crushed, probably dropping below .05, and will no longer be attractive to purchase in light of the uncertainty created by the negative ruling.
Clearly, a lot is riding on the next proceeding.
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