I have 6 deep in the money option calls that expire Jan 19th 2013 The strike price is 60. ABT is splitting into two companies. I believe it's a 1/1 split. Each shareholder will receive 1 share of the new company and 1 share of the old company. Does anyone know how this will affect my option? I've never had an option with a company that did a split before my option expired. Thank you in advance.
From what I can tell from various sources, the split is a 1 for 1 and that would be reflected in the options. If you exercise the options prior to Jan 1, each option is worth 100 shares of Abbott. If you exercise the options after Jan 1, each option will consist of 100 shares of Abbott and 100 shares of AbbVie.
I also looked online for an answer and it seems like a ratio is done using market value of one company vs the other at the time of the split. You then get options equivalent to that ratio of the market values. At least that is the way I interpret what I found doing a search online.
yea i know it's a 1-1 split so I figured my option would be worth 100 shares of old company and 100 shares of the new company. The part I'm confused about is the strike price. Currently my strike price is 60. Hopefully they will simply cut the 60 in half. Believe it or not i called my broker no answer, and i called the CBOE they didn't even know ABT was splitting.