InterDigital Inc (IDCC)

[The_Net]

MB, Several points:

1.People make rules. It doesn’t make sense but that probably will happen in the IDCC special dividend case. I assume all the option holders (call/put long and short) will have an equivalence of special dividends. Dividends don’t have expiration but options do. That’s the sticking point. In your scenario, let’s say both seller and buyer of the Dec14 45 calls will do nothing and the SP will be at $43 at the close of 12/14. The special dividend won’t have any impact (neither positive nor negative) on both.

2. Basically they adjust the intrinsic value (Stock price – strike price) by $1.5 and leave the time value intact; it’s not a 100% option adjustment. The option strike prices indeed have some influence on “the time values”. Eg. the deep ITM calls have very low (insignificant, in some cases) time value compared to the near ATM calls.

3. I know the option Strike Prices have never been adjusted for the regular dividends.