Buyouts and options

M

marcoPolo21

I bought some $40 long term calls [Jan 13] for 5-10 cents,
and the stock is trading around $6.25.
[the stock has been over $40, this year]
The hope is, for the options to at least double,
sometime before expiration.

But, if the stock is bought out, for say $25-30 [offered],
I assume my calls will be worth, at most 0.01
Does that sound about right?

marc
 
Quote from marcoPolo21:

I bought some $40 long term calls [Jan 13] for 5-10 cents,
and the stock is trading around $6.25.
[the stock has been over $40, this year]
The hope is, for the options to at least double,
sometime before expiration.

But, if the stock is bought out, for say $25-30 [offered],
I assume my calls will be worth, at most 0.01
Does that sound about right?

marc
More...

It depends on when the take out is announced.
At what price it is announced.
And most importantly what the consideration is.
 
Unless here's some strong chatter about someone coming in with a higher bid for the company, 40 strike calls with a buyout offer of $25 to $30 will be worthless. And even with it, still close to worthless. You'd have to get a lot closer to $40 for anything significant to occur.
 
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