Non Standard Options
Hi Mark, Hello Pr

I now have gained enough experience for calls and puts from last time. Now the question is about non standard options.

I was trying to buy standard 50 contracts for JUN EXM $50 Calls.  Did not pay attention and ended up purchasing as listed below.  The obvious lesson, which you have already learned is to pay attention to the option symbol.  If it's not the expected symbol - in this case EXMFJ (Jun 50), or did you intend to buy EXMFH (Jun 40 call?) - then something is out of the ordinary.

*** Jun 40 Call OPRA: +MEFFH $0.15  0.00 (0.00%)
$1326.27 cash in lieu of shares, 39 shares of EXM
Bid always stays -- and ask always stays at $0.15. See below.  That's because these options are worthless.

What are these options?  Your answer lies in the line above:  One call option gives you the right to buy 39 shares of EXM.  You also receive $1326.27 in cash.  Because the strike price is 40, you get both of those items by paying $4,000.

How do we profit from it? Virtually impossible.  You would need those 39 shares to be worth $4,000 minus the cash, or approximately $2,674.  Thus the stock must be trading over 68.50 for these calls to go in the money.  They are essentially worthless.

Any split adjustment related?  Yes.  You must search the option at the CBOE to find the answer:
"each share of QMAR Common Stock outstanding immediately prior to the consummation of the Merger will be converted into the right to receive 0.4084 of a share of EXM Class A Common Stock, subject to downward adjustment to reflect any cash dividends paid by Quintana prior to the closing date of the merger, plus $13.00 cash."

I have 50 contract of this, can you explain how and when it will turn profitable? I am thinking to get rid off it if it is risky. You need a substantial rally (50%) to make money from these options.  You can think of getting rid of them, but I doubt you will find anyone to buy them.

I'm sorry I don't have better news for you.


Mark D. Wolfinger
The Rookie's Guide to Options:
The Beginner's Handbook of Trading Equity Options