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The Wendy's Company Message Board

  • gollywogazoo gollywogazoo Jul 2, 2009 5:30 PM Flag

    sold the wwvab's against my long position

    each call = 425 shares @ a $10 strike price, expiring Jan 2010. But I must say I'm very suspicious when Mr. Market hands me a dollar & change time premium on an option fully $6 out-of-the-money...

    am I missing something here?

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    • I agree with pepsite. The 1/2010 options are leftover Wendy's options from before the merger. That's why they show strike prices as high at $45, dating from when Wendy's traded in the 30's and higher. Options on the merged company use a Nov-Feb-May-August cycle, with January 2010 the last of the old Wendy's options.

      My math could be off, so check with your broker, but I think you need to divide everything by 4.25 (the amount of the share exchange). So...while the contract shows a strike price of $10, divided by 4.25 means a true strike price for each contract of about $2.35 for 425 shares. That's why the premium seems so high; it's well into the money and actually reflects no premium at all to the market. Unless the stock collapses, you're going to be exercised in January.

    • Those are Non-Standard (ns)options, a normal call contract is for 100 shares.

      You should ask your broker to check with Options Clearing Corporation for any other conditions associated with those calls, I never buy any calls that have the NS designator attached to them. Those options can be squirrely because they usually reflect some occurrence such as a reverse split, and can have other restrictions on them. In this case, they are probably left over Arbys options from the merger.

      Good luck!

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