It's really two sides of the same coin. Since KOG's price follows WLL's price, you actually ARE getting a higher price for your KOG holdings when the shares swap. That has nothing to do with the arb when the shares aren't totally in line, but that's pennies for most people.
Call your broker. My experience in similar situations is that your options will be in the new company and adjusted for the swap. So at the time of the merger, each of your call contracts will have 17.7 shares of WLL instead of 100 shares of KOG, and price will adjust accordingly. So for a time - until expiration - there will be two types of WLL contracts - those with 100 shares and those with 17.7 shares. If my memory serves me, the last time I had that situation there wasn't much volume on the special contracts v. the normal contracts. Personally, for the calls I currently hold, I will not wait for the conversion but will take my profits early.
Would not be surprised to see Buffet enter the domestic energy business soon. WLL is the prettiest gal at the ball.
KOG will not go to 6 a share. If it did, everyone in the market, including the Central Banks, would buy all they could. Buy 1000 shares at $6 a share for $6000 and that would convert to 177 WLL shares at $82 or so per share. Do the math. Arbitrage keeps KOG from going to your $6 no matter what. The only way KOG shares decline is if 1) WLL shares decline; or 2) the deal doesn't go through.
You don't need any clarification. You understand it completely. The arbitrage play will keep the prices from getting to far out of whack.
I'd sure be buying WLL on any pullback.
Sentiment: Strong Buy
As I understand it, the two companies are largely owned by similar shareholders. This deal was cut to benefit both sets of executives and investors. The premium will come in the form of a spike in the price of WLL, not of KOG. You can safely sell KOG today without worrying whether it will go up, because it will not. Or you can hold onto them and get the WLL shares which will grow.
Depends upon what date the closing price of WLL is in the agreement. Could be much higher. All we know is that we get .177 shares of WLL for each KOG share, at this point.
Someone has a phone line to ISIS and Putin. Oil risk trade is off.
Tend to agree on the price, not the debt comment. If 35 or 50 were a sure thing, someone would buy out this company today for 20 and make a lot of money. 20 even seems a stretch to me even at 125 oil.
Anyone read the bloomy article this week on frackers with high debt loads, basically predicting a shake-out? KOG pays just under 10% of revenue in interest expense. Some of these frackers pay 20%+. Wondering if KOG will be able to pick up some cheap acreage somewhere as a result.
Well, you know their low for the year - at the beginning of the year - was $29. Don't know how much confidence to put in GS.
You just have to hit ignore a lot. Still, not much trading going on it seems.
Just looked at the daily candles, what a bunch of volatility today! Haven't seen that lately. And implied volatility is at 72 today? Low volume day, I guess.
Just wait for the buyout. Your wife will be all over you.