sold put contracts now company merging ??

[joesxm3]

I sold 5 put contracts for HUT at $3 strike price expiring in 2024.

HUT seems to be merging with another company and for every 5 share of HUT that I have I will receive 1 share of the new stock (or the other company's stock).

What happens to my put contracts when this occurs?

I called my broker but they guy I spoke with did not sound like he knew what he was talking about.

He seemed to say that the options contract would be repriced but did not make sense.

When I pushed him he seemed to say that each option contract would now be controlling 20 shares instead of 100. How can that even happen?

 

[njhowie]

When I pushed him he seemed to say that each option contract would now be controlling 20 shares instead of 100. How can that even happen?

No different than when a stock split occurs and you hold options.

 

[joesxm3]

So my question is what happens to options in the case of a reverse split?

 

[joesxm3]

I did some searching and it seems that my contract (100 shares) strike $3 would be changed to 1 contract now for 20 shares with strike of $15. Is that how it works?

 

[fh2000]

I did some searching and it seems that my contract (100 shares) strike $3 would be changed to 1 contract now for 20 shares with strike of $15. Is that how it works?

I held options before stock splits, mergers. Basically, after the action is done, my options might become what you described with some fractions. Each company is different. But, the total value should stay the same.