Hey Guys,
I purchased this NKLA put before the company announced their Reverse Split and froze purchases. This is saying I can sell my option, but no more can be purchased at this time. If this is a $0.50 Put with expiration on 10/18 and I submit this to the 30:1 split math wouldn't that make this a $15 put "technically?" The stocks current value is at $7.40 so this is half the Puts current theoretical price shouldn't it be worth more than $25 at this point?
I purchased it for $21, so months and several red weeks later we have only gained $4? What am I missing here….sorry, I'm new!
HopingfordiamondhandsandallIgotwasaQuarterroll
https://i.redd.it/rxlsgriny0ld1.jpeg
Posted by 08BitTerror
3 Comments
reverse split does not change the amount you gain. think of an analogy, there is a pie. that one whole pie is worth $80. but there’s too many ppl for just one pie so you cut it into 16 pieces. each slice of Pie would be worth $5 instead of a whole $80 pie for (1 share). get it?
You should always check the OCC memo on adjusted options:
[https://infomemo.theocc.com/infomemos?number=54848](https://infomemo.theocc.com/infomemos?number=54848)
One contract’s deliverable is now 3 shares plus $2.65 cash, but the strike price and multiplier are the same. So if one of these puts were to be exercised, you would give up 3 shares of NKLA plus $2.65 cash, and receive $50. With NKLA at 7.33, this is a total value of $24.64 of value. So the option has (50 – 24.64) / 100 = 0.25 of intrinsic value.
It’s a start