Please help me place this order

[sk_option]

Hi folks,

I need your help with an Option related question.

I used to own 400 shares of Sprint (before Softbank) and had written/sold 4 contracts of Jan 2014 $4.50 Call option.

However, due to the Sprint-Softbank deal, my position got sliced up and I'm left with the following:

52 shares of the new Sprint and 2 non-standard contracts of 26 shares each [S 26/100 (US$ 566.1) JAN 14 4.5 CALL].

I do not want to wait until Jan 2014 and would like to get out of the position.

I tried to buy back the Call, but it looks like my broker wants me to pay for 2 standard contracts (of 100 shares each)
instead of 2 non-standard contracts (of 26 shares each).

With bid/ask at 2.85/2.91 and last sale at 2.97, here's what I expected to pay to buy back the 2 non-standard contracts:

52 * 2.97 = $ 154.44

But when I try to place the order, here's what my broker wants me to pay:

200 * 2.97 = $ 594.00

Am I missing something? Please advise.

Thank you.

Regards,
SK.

 

[stoic]

Your description is somewhat confusing. But I think this should clear things up.

With the merger of Sprint with SoftBank the New Deliverable Per Contract:

1) 26 (New) Sprint Corp. (S) shares
2) Cash in lieu of .1744048 fractional S shares (or $1.33)
3) $564.77 Cash ($5.647658 x 100)
The contract multiplier remains 100

So... 26 shares of S @ 6.48 = 168.48 + $566.10 Cash = 734.58, divided by 100 7.35

The adjusted 4.50 calls @ this current price are $2.85 in-the-money.

What's confusing is if you had 400 shares and 4 short calls what you should have after the adjustment is 104 shares and short 4 adjusted call contracts.

More detailed information can be found on OCC Infomemo #33024 & #33095