InvestorQ : How is the merger impact factored into the options contract?
F&O
Arya Nanda made post

How is the merger impact factored into the options contract?

Answer
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Maniish Lofar answered.
2 years ago


On the announcement of the record date for the merger, the exact date of expiration (Last Cum-date) would be informed to members.

After the announcement of the Record Date, no fresh contracts on Futures and Options would be introduced on the underlying, that will cease to exist subsequent to the merger.

Un-expired contracts outstanding as on the last cum-date would be compulsorily settled at the settlement price. The settlement price shall be the closing price of the underlying on the last cum-date.

GTC/GTD orders for the futures & options contracts on the underlying, outstanding at the close of business on the last cum-date would be cancelled by the Exchange.