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Inergy, L.P. Message Board

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  • lizahuang54321 lizahuang54321 Oct 24, 2012 4:15 PM Flag

    NRGY option guestion

    When there is any kind of stock slit, merger, spinoff or something which affects the value of shares/units, all existing options contracts are adjusted to reflect whatever happened to the shares. Thus you then help adjusted NRGY options contracts. Your brokerage account should highlight that. For example in Etrade, I have a few adjusted options contracts and they are highlighted with a bold red exclamation mark. For any such, I can drill down and see the precise deliverable and strike price of the adjusted contract. Note that both the deliverable and the strike price may change in the adjusted options contract. In the case of NRGY, what I posted below was what I looked up as the NRGY adjusted options and it matches precisely with what you said happened in your account.
    I don't follow NRGY that closely and have forgotten the exact terms of the NRGY-SPH deal, however you can look it up, and I'm sure that you will find it precisely matches the new deliverable on the adjusted options contract.
    Bottom line: what happened with your account was correct and you have no cause to think the brokerage did anything wrong. You just need to review the terms of the NRGY-SPH deal and confirm it matches the adjusted options contract deliverable.

    • P.S. Reading your post again, the final result sounds correct, however I am not sure why it was not all done at the same time when your option got exercised - not sure why the full adjustment was delayed till the option expiration date. That does seem funny, however I never had that happen so cannot comment from personal experience how that usually works.