1

I had bought long-dated Calls on OXY. Something happened around a month ago where the ticker I started seeing in my IB app turned to OXY2. Today I wanted to sell it and it seems the contract is no longer available for trading.

The information from IB is extremely sparse, I've attached a screenshot of what I'm seeingOXY.

I would love to understand in more detail what happened with the OXY contract? Why would it stop trading? What are the changes in the underlying stock that could make a long-dated option moot or worthless?

  • That happened to me on other tickers. You should be able to right-click on that contract in your portfolio view and click "close". It will open an order entry view that allows this transaction. OXY2 going forward may only be traded to close existing orders, but not open new positions. – Laith Jul 8 at 15:25
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Whenever you see a number after the root symbol, it means that you are looking at an adjusted option due to a corporate event. Adjusted options are a PITA.

I see OXY2 options listed in IBKR as well as at a web site that provides option quotes so I'm not sure what to say about your question about the contracts having stopped trading. Here is some information regarding that adjustment:

On June 26th, Occidental Petroleum announced a distribution of warrants to purchase additional shares of common stock. Owners of OXY shares will receive 1/8th of a warrant for each share of common. A warrant will entitle the holder to buy one share of OXY common for $22 per share. The waarrants will be distributed on 8/03/20 to stockholders of record as on 7/06/20. The warrants will have a term of 7 years and are expected to trade on the NYSE.

Here is the information from the OCC adjustment bulletin:

DATE: JULY 1, 2020

SUBJECT: OCCIDENTAL PETROLEUM CORPORATION – WARRANT DISTRIBUTION OPTION SYMBOLS: OXY/2OXY NEW SYMBOLS: OXY2/2OXY2 FUTURES SYMBOL: OXY1D NEW SYMBOL: OXY2D DATE: 7/2/20

Occidental Petroleum Corporation (OXY) has declared a warrants distribution to OXY Common Shareholders, as described below:

WARRANTS: Each warrant will provide the right to purchase one share of Occidental Petroleum Corporation (OXY) Common Stock

PRICE: $22.00 per OXY share

DISTRIBUTION RATIO: 0.125 of a warrant per one Occidental Petroleum Corporation (OXY) Common Share

RECORD DATE: July 6, 2020

EXPIRATION: To be determined

GUARANTY PERIOD: To be determined

Occidental Petroleum Corporation (OXY) Warrants are anticipated to trade on The New York Stock Exchange.

CONTRACT ADJUSTMENT – OPTIONS

EFFECTIVE DATE: July 2, 2020

OPTION SYMBOLS: OXY changes to OXY2 2OXY change to 2OXY2

STRIKE DIVISOR: 1

CONTRACT MULTIPLIER: 1

NEW MULTIPLIER: 100 (e.g., a premium of 1.50 yields $150)

NEW DELIVERABLE PER CONTRACT: 1) 100 Occidental Petroleum Corporation (OXY) Common Shares 2) 12 Occidental Petroleum Corporation Warrants 3) Cash in lieu of 0.5 fractional OXY Warrants

SETTLEMENT ALLOCATION: OXY: 95% OXY Warrants: 5%

CUSIPS: OXY: 674599105 OXY Warrants: TBD

THE SETTLEMENT ALLOCATION OF THE TOTAL STRIKE PRICE AMOUNT IS BEING PROVIDED SOLELY FOR THE PURPOSE OF THE INTERFACE BETWEEN OCC AND THE NATIONAL SECURITY CLEARING CORPORATION (NSCC), AND IS NOT INTENDED TO BE USED FOR ANY OTHER PURPOSE, TRANSACTION OR CUSTOMER ACCOUNT STATEMENTS.

PRICING

Until the cash in lieu amount is determined, the underlying price for OXY2 will be determined as follows:

OXY2 = OXY + 0.125 (OXY Warrants)

You might be able to get more clarification if you contact the CBOE.

| improve this answer | |
  • Great write up, thanks for taking the time Bob! I've sent them an email, will let you know when I hear back to further clarify so we can all learn something new :) – David Karam Jul 8 at 13:27
  • You're welcome. If you're using the TWS standalone version, you can create an option chain page for OXY2 and it will populate with symbols and quotes. – Bob Baerker Jul 8 at 13:37

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