Underlying getting delisted. So what do I own Calls on?

[d0rian]

I own a bunch of Aug Calls of Aurinia Pharma (TSX: AUP, NASDAQ: AUPH), which is voluntarily delisting from the TSX on 7/30, but keeping its US listing on NASDAQ (b/c 95% of the volume is on the US side).

They're OTM now but not by much. Presumably I could track whether they're "ITM" by converting the US share price to CAD but....I'm not at all clear what I'd even have a claim on if AUP shares won't exist in a week. I.e. What does it even mean to "exercise" Calls for a deliverable that no longer exists? I can sell-to-close this week to a MM at a significant loss but that doesn't seem great. What are my options?

(EDIT: I found plenty of reading on what happens when a co gets delisted because it becomes a near-worthless penny-stock...but that's not the case here as it's still a $12 USD stock on the NASDAQ where it'll continue trading.)

 

[OptionsOptionsOptions]

I would think that the delisting from the Canadian exchange would have no affect on your options since the underlying is AUPH on the Nasdaq.

 

[d0rian]

I would think that the delisting from the Canadian exchange would have no affect on your options since the underlying is AUPH on the Nasdaq.

No, I own Calls on the Canadian/TSX listing (AUP). That's what's getting delisted.

 

[OptionsOptionsOptions]

No, I own Calls on the Canadian/TSX listing (AUP). That's what's getting delisted.

I didn't know that options traded on TSX stocks. The volume must be very low.

 

[ajacobson]

Talk to both venues. I don't see a bulletin from OCC, but pick up the phone.

 

[guru]

1. If they're OTM then you'd lose the whole premium by exercising, which means it wouldn't make sense to exercise.

2. I'm looking at the options chain and for example 15-strike calls seem to go for $1.95. If that's low then it may be because the stock went down, not because you'd need to "sell to MMs at significant loss". The loss comes from the price dropping, not from MMs.
You can try selling them at $1.90 that would be near the mid price. Not sure if that's attainable but there is no reason not to try. The bid/ask spread is very wide, but it's often possible to get a price near the mid. Only if you keep adjusting your price and can't get a fill then you could conclude that "you can sell-to-close to a MM at a significant loss". And even then, it's hard to figure out fair price on those calls and how much profit you're giving up to MMs.

You could also wait couple days if you believe that the price may recover a bit (but it may not).

 

[JSOP]

No, I own Calls on the Canadian/TSX listing (AUP). That's what's getting delisted.

Just because a stock is delisted from an exchange, it doesn't mean it doesn't exist anymore. It still does; it's just not traded on an exchange anymore. If the company that issued the stock goes bankrupt then that's a different story; then its stock may truly not exist. But as long as the company that issues the stock is still there, where its shares are traded has no effect on its existence. And since the shares the underlying is still there, your options are still valid and you should be entitled to all rights conferred to you as the owner of the options.

I would suggest you to contact the Canadian option clearing bodies that oversee the management of options on Canadian stocks to find out how your options would be handled in this situation.