What Happens To Options If An ETF Closes?

[robert111]

Hello, I own long term options on a 3x etf. With the new possible regulations regarding leveraged funds, I wanted to know what happens to options if the 3x etfs close? Do option holders just lose all of their investment if the options are out of the money?

Thanks

 

[xandman]

I am guessing based on the typical news event for any underlying.

If a date in the future is announced, you will see an acceleration in option decay.

If the closing is a announced on the same day the ETF is closed, then volatility will crash making the OTM effectively worthless.

 

[Occam]

Also, theocc.com publishes a document called an "infomemo" whenever a major corporate action occurs, which describes what happens to the option, at least from a contract perspective.

 

[rmorse]

Hello, I own long term options on a 3x etf. With the new possible regulations regarding leveraged funds, I wanted to know what happens to options if the 3x etfs close? Do option holders just lose all of their investment if the options are out of the money?

Thanks

In general, if the equity is not trading, the options don't open. The OCC would send out a bulletin with regard to the settlement procedure. Are you really expecting them to just stop trading?