Imtech options delisted this week
A little bit outside of the scope of this website, but Imtech has been the talk of the town lately. We’ve seen a fat finger trade, claim/stock arbitrage and rumors about firms making or losing millions in the meantime.
The 131:1 rights offering has been a text book example of a messy finance operation. Retail investors holding regular shares received a claim for 131 new shares at 1 cent each. That was a 20% discount of the regular stock price. In reality, these rights can be seen as in the money call options.
Stock price dropped a bit and all rights expired worthless. Think about it, a modest stock drop and investors losing 96% in a few weeks. Not many folks must have realized the tremendous risk of this rights offering.
There’s more some investors probably have missed. Monday the reverse stock split ratio will be announced. When the ratio is higher than 210 old shares for 1 new one, the contract size for each option will drop from 106 (current situation following the offering) to less than 0.5 share for each contract.
The rules from Euronext are very clear. Regular options have a contract size of 100 shares. They won’t allow options with an underlying of less than one share. If contract size drops below 0.5, all options will be delisted and settled in cash. Reference is the closing price. In Imtech this means calls will settle at 1 cent, all puts will settle 1 cent below parity.
Unsure how exchanges, clearing and brokers will handle such an operation in terms of transaction costs. Very well possible traders and investors will be confronted with unexpected transaction costs for worthless calls. Open interest is large. TOM will follow Euronext, but Eurex will accept options with a fraction of a share as underlying. Imtech, what a mess.
I think the biggest winner here is Virtu – weren’t they front these options from day one? wink wink
Trouble is worse when ratio is 200:1 : an equalization payment kicks in and the contract size will be rounded to 1.
So if you are long worthless calls, you have to “double” your position. Complicated stuff nobody will understand.
500:1 …. bazinga
How do u mean ‘front these options’
Careaus 2 is goed bezig
Caerus 3 niet zo
Careus 2
they don’t do AEX…
notice someone new? hallo nachbarn!
notice someone new who?
good for Careaus 2
who is Caerus 3?
what are the germans doing on amsterdam trader?
zeit verschwenden? 🙂
what’s the idea with having 2 memberships? getting more throttle?
niemand nat gegaan met Imtech of Fugro?
I don’t get this : “Stock price dropped a bit and all rights expired worthless.”
Also, this is not coherent with rights being like ITM calls.
unless “a bit” is in this case -94%
‘right’ to buy a stock at itm price sounds like a ‘itm call’?
call was slightly itm (20%). In exchange for your stock, they money was switched for 131 calls.
Stock dropped 20%, shitload of claims/rights expired worthless.