UNG2 Options

J

jsigs

Hello all,

So I was cruising through the option chain for UNG and noticed a these adjusted options called "UNG2." Wondering what that "2" meant, I found the following link:

http://www.cboe.com/publish/TTStockSM/12-084.pdf

So from my understanding, the only difference is that these new UNG2 options hold 25 shares rather than 100.

So then I looked at some of the UNG2 July puts and noticed that the July 10 Put is selling for 5.60. Now please correct me if I'm wrong, but if I were to sell 1 contract, I would collect $560 in premium upon expiration as long as UNG stays above $10??? And even if it falls below that and is exercised, I would only have to buy 25 shares at $10 a piece??

I'm just a bit confused because it just seems too good to be true.

Any help would be greatly appreciated!
 
UNG did TWO splits which is why you see UNG2 instead of UNG1 ~ if you look at the Jan 13 4$ Puts you'll see both UNG1+2 there.

You can NOT open new orders with those option contracts - ONLY closing orders can be placed. Any stock that splits has the same restriction.

FYI - The UNG2 contracts are at 1:4split iirc, so the 5$ UNG2 contract is really 20$, and the 4$ UNG2 is really 16$, the 10$ UNG2 contract is really 40$.
 
Quote from Whistlingleaf:

You can NOT open new orders with those option contracts - ONLY closing orders can be placed. Any stock that splits has the same restriction.
More...

What!? You mean I can't sell the the July $1.00 puts for $3.35???
I better cancel that purchase order for the Lear 85...

:mad:
 
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