Is this free money?

You're right lol. I guess I was thinking that since the underlying is basically guaranteed to go to 0 that the option would be fully priced once it went in the money.

Thanks,
TT
 
I asked customer service at IB how these options would be settled. Based on their response, I sold all but one of the puts. I'm going to let that one ride to see how it settles out.

Interactive Brokers has received your correspondence regarding your holding in Whiting Trust I options. Please know that the Options Clearing Corp (OCC) defines the terms of US option contracts. At this time, the OCC has not released a contract adjustment memo which outlines the impact of the trust termination on open option contracts. As such, IB cannot confirm if there will be any changes to the deliverable once such an action occurs.

Please refer to the OCC website contract adjustment memo page found at www.optionsclearing.com under the heading Clearing & Services / Information Memos to monitor for new information.

In general, if the terms of the options are to deliver stock and the stock is converted to cash, the option will similarly be modified to deliver the equivalent cash. However, it is important to keep in mind that should the delivery result in a short stock position which will later convert into cash, the account may be charged borrow fees between settlement and the conversion date.

Regards
Mary
IB Customer Service
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