HOLLYWOOD STOCK EXCHANGE
THE ENTERTAINMENT MARKET
THE ENTERTAINMENT MARKET
Every securtity delisting follows the same rules...
If you are long and the security delists at a price less than you paid, you lost money. If it delists at a price more than you paid, you made money.
If you are short, and the security delists at a price less than you paid, you gain money. If you are short and the security delists at a price more than you paid, you lost money.
Of course, you ask about puts and calls becaues, at least one of the pair always delists at zero. So if you short and it delists at zero, you "double your money" ad you get back your investment plus the differece between delist and investment.
Your question about above or below strike is not properly worded. If MOVIE.CA has a strike of 20, then the question revolves around whether or not the OPENING WEEKEND ACTUAL was greater or less than the strike. So..Trying to answer your 2 questions....
A) If the strike was 20 and the Actual was 25, the delist is 5.
If you short the call at 2 and it delists at 5, you lose H$ 3 at delist plus your initial investment foir a total loss of 5. Since this security was halted 3 days before delist, and it did not halt at exeactly 5, the effect on your portfolio at delist may be more or less than the H$5 because your portfolio reflect the "current prices" not the price paid. So if it had a current price of, say 4, your portfolio only shows a loss of 1 per share, because you were already charged for the initial investment and the change from 2 to 4 is also already taken into account.
B ) If the Strike was 20 and the actual was 19, then the call delists at 1
If it delist below strike, and you are short, you gain the difference between price paid and the delist. If you shorted at 2 and it delists at 1, you gained H$1 per share. Once again, this is different than the affect on your total portfolio, as you were already charged the H$2 that you paid. Thus, in this scenario, your portfolio would reflect a gain of H$3 per share, the H$1 profit, plus the H$2 that you paid to short the security in the first place.
Shorting option Jun 17, 06:42
correct answers inside... Jun 17, 08:26
Every securtity delisting follows the same rules... Jun 17, 08:29
Correction to B Jun 17, 08:40
your correction is not complete.... Jun 17, 09:09
It's generally a good idea to never short calls or puts, unless you are certain of the outcome (which is VERY rare). -more- Jun 17, 10:06
So, to summarize? (Question not statement) Jun 17, 11:05
correct {nm} Jun 17, 11:22
Thnx! {nm} Jun 17, 13:30
