Need help with this question from the message board: What happens to the value of call options if Yahoo sells off parts of itself and distributes the proceeds as a dividend to the shareholders? As an example Yahoo currently trades around $16 per share. If Yahoo sells half its operations and distributes that amount to the shareholders as a dividend then the value of the shares should drop to about $8 per share reflecting the value of the company after the operations are sold and the dividend is distributed. This would make the call options at a strike of 15 or 16 almost worthless. So if Yahoo sells off parts of itself prior to a buyout the Calls get F^@)^d. Is this correct or not?
I realy don't know, maybe you could change your option and buy the stock and get the divident, but i don't know if the date of the perchase would be when you bought the option or when you change your option to stock. Sorry not sure.