I recently bought 17 Livongo $150 call options that expire on Aug 14th. LVGO closed yesterday at $144.53. This morning they announced phenomenal earnings and shares reached a high of $167.88 in the pre-market.
Ten minutes after the earnings announcement they announced that they are going to be acquired by Teledoc for .592 shares and $11.33 cash, closing at the end of the 4th qtr. LVGO's price took a huge swing down to $128. Now I am totally screwed on my calls.
I also have calls for 2021 and 2022 that are in-the-money. They too have dropped in value like crazy.
1. What happens to my Aug 14 $150 calls?
2. What happens to my 2021 and 2022 calls when they merge in Dec?
3. Lastly, the share prices have plummeted for both companies. Do I get the .592 at the valuation when they announced + $11.33 or when the deal is done, making it worth less if the share prices haven't recovered? So $11.33 + the difference of the share price at time of close and time of announcement and .592?
This seems very shady to announce right when you announce phenomenal earnings.