Say I purchase OTM puts with a $5 strike and the underlying company is acquired through a tender offer that pays $19.00 cash per share. My contracts are accelerated and adjusted to reflect the new terms. The contracts become worthless, but do I receive the premium, and which premium, if any, do I receive? The premium that the acquiring company is paying per share or the premium of the $5 strike?
You purchased a $5 strike put. Basically betting the stock would drop to lower than $5. The stock ends its life at a value of $19/sh. Your put expires early, worthless.