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Let's be specific. I hold April 2016 135 calls for CB (Chubb). CB is being acquired by ACE. The deal is $62.93 per share in cash and 0.6019 share of ACE stock for each share of CB. The deal is expected to close 1Q'2016, before my expiration date.

What happens to my 135 calls?

At today's valuations the return would be 138.36 for the cash and stock deal. There is no ask price listed for the options.

I can find no information on this odd situation. Any help would be appreciated.

Don Venetti
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I believe that your option contracts will become "non-standard" and will be for a combination of ACE stock and cash. The allocation between stock and cash should follow that of the acquisition parameters of the underlying - probably with fractional shares converted to cash.

Hence 1 call contract for 100 shares of CB will become 1 call contract for 60 shares of ACE + $6293 cash + a cash correction for the 0.19 fractional share of ACE that you would have had claim to get. The corrections should be 0.19 sh x $62.93/sh.

  • Thanks Brick, that's what I expect, I think, but it's not clear to me from anything I can find. Guess I should call my broker, but I suspect they will be as confused as I am. – Don Venetti Dec 13 '15 at 20:14
  • When the sale is finalized, then all of the services will list this non-standard option as non-standard with the terms. Likely it will be list along side standard options for ACE until all of the CB option expirations pass. –  Dec 14 '15 at 00:47