I have a small, few hundred dollar position in an OTM Strike ($22) put option expiring Jan. 2021 for KEMET (KEM).

The company was acquired by Yageo recently.

Yageo trades on the Taiwanese stock exchange, which I know absolutely nothing about and does not exist on a US market, it seems.

I'm trading on thinkorswim currently and get the attached message if I attempt to open an order to close the position by selling the options. Also, the options chain for KEM is gone.

thinkorswim message

I also see this message/row in my positions list, which wasn't there before.

other message

What do I do here? This isn't an all-cash merger, so these options should not have been rendered worthless.


Per your link:

In accordance with the terms of the merger agreement, Yageo has acquired all of the outstanding shares of KEMET’s common stock for US $27.20 per share in an all-cash transaction with an equity value of approximately US $1.6 billion. As a result of the transaction, KEMET is now a wholly-owned subsidiary of Yageo, and KEMET’s common stock is no longer listed on any public market.

As an all cash deal. KEMET stock and options no longer exist and you have no stake in Yageo. When this occurs, expiration is accelerated to the merger/takeover date. With a price of $27.20, your $22 puts are OTM and therefore they are worthless.

I have no idea why post merger your position is still listed in you account summary page. Call your broker and see if they can provide any enlightenment.

  • 1
    It looks like OCC Memo #47132 says that options with an expiration date later than June 19 (this Friday) will have their expiration date adjusted to June 19, no earlier. So although the options are worthless, they don't actually expire until the end of the week. – Tanner Swett Jun 17 '20 at 21:51
  • Nice catch. I googled but I didn't pick up an OCC memo. What I don't understand is the June 19th expiration. It would seem that the date is no more than a technicality because with the takeover, how can puts appreciate in value if there's no longer an underlying? – Bob Baerker Jun 17 '20 at 22:02

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