Simply put, yes.
I bought that call. I was betting the shares would rise in value by Jan 2018, and chose the $130 strike. With a strike nearly a year away, I paid a premium that was all time value as the shares traded at
Now the shares are replaced by $128. The time value has gone to zero, and there is no intrinsic "in the money" value. If the shares were bought at $140, the time value stills drops to zero, but the option is closed at $10 in the money.
My answer was for a cash deal. In a case where the old shares are replaced by new shares or a combination of shares and money, the options terms are changed to reflect the combination of new assets for old.
Update based on disclosure that it's Monsanto we are discussing.
Bayer and Monsanto have announced that they signed a definitive
agreement under which Bayer will acquire Monsanto for USD 128 per
share in an all-cash transaction. Based on Monsanto’s closing share
price on May 9, 2016, the day before Bayer’s first written proposal to
Monsanto, the offer represents a premium of 44 percent to that price.
You can see that the deal has been in the works for some time now. Further research shows they expect the deal to close by "the end of 2017".
It's not a done deal. This is why the options are still trading.