MO split. Holy Shit.
Written on March 31, 2008 by OptionsRopeaDope
Wow… guess there is a big lesson learned here, like know your underlying intimately before trying a trade. I thought it was a good idea anwyay…
So, my double calendar, with, calendar at 70 and 75… imagine my surprise when I check MO this morning and see that the price is a grand total of $20/share. The liqidation value was still respectable, so I figured I need to figure out what was happening, and of course, MO has SPLIT into two companies, MO and PM. Now, I still can’t figure out how the options are going to shake out (I suppose I’ll get 1 in each new company, for every 1 I had in the old) but it isn’t reflected anywhere yet. I did figure out that the “effective” underlying price I can expect is the sum of the two share prices (MO and PM). Which right now is very nice, about 73.50 or so… and I actually gained a bit on this trade after watching it see-saw all day (including going almost to my max loss.) Im looking to exit this asap no matter what, just because I don’t know what in the hell is really happening.
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