Is this free money?

T

TulsaTrader

Stock symbol: WHX - Whiting USA Trust I
June 19th 2015 1$ PUT is .75/.80 right now.

From their web site:
http://www.whiting.com/whiting-usa-trust-i/faqs/

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Q – How long are the trust’s distributions expected to last?
A – Based on independent engineering at December 31, 2013, the trust is expected to terminate in March 2015. That is the estimated time when 9.11 million barrels of oil equivalent (the oil and gas reserves attributable to the trust) are expected to be produced and sold.

Q – What will be the value of the units when the trust terminates?
A – Zero. There will be a final cash distribution to unit owners, and the properties associated with the trust will revert back to Whiting Petroleum Corporation.
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I'm always skeptical when I see something that looks like a sure thing. I've bought 5 of the June 2015 $1 puts for now.

Anyone ever bought puts on a trust that is about to expire before?

TT
 
I've been eyeing this, as well. I'd be very surprised if the trust is still around 3 months after its termination date. I don't believe there will be any trading in the units after termination - ie won't be anything deliverable in June. If that is the case, I believe the options will cash settle and put holders will be paid $1.00 x strike price.

Possible risks I see:

They somehow adjust the expiration date forward.

There actually will be some type of OTC market in the units in June which could be trading >$1.
 
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