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At the Amsterdam Exchange there is this "gentleman" agreement
between the AEX-administration and the floor, wich forces the
market makers to always make and keep a market in a option-serie.
In that, it will trade at "Best price" level.
(You might not get the true 300 but say around 280-295).
There will always either be an implementation of this agreement or
that another market party, market maker self or the writers, will be
'intrested' in taking over your position, by buying it from you.
Regards,
Ton Maas
Ms-IRB@xxxxxxxxx
-----Oorspronkelijk bericht-----
Van: William F. Nakielski <frt1000@xxxxxxxxxx>
Aan: metastock@xxxxxxxxxxxxx <metastock@xxxxxxxxxxxxx>
Datum: woensdag 30 september 1998 8:52
Onderwerp: Re: Bankrupt ?
>
>-----Original Message-----
>From: Marianne Seehusen Ditz <marianse@xxxxxxxx>
>To: MetaStock <metastock@xxxxxxxxxxxxx>
>Date: Tuesday, September 29, 1998 04:50 AM
>Subject: Bankrupt ?
>
>
>>All :-)
>>Just a question. If a Blue Chip is worth $300, and you expect it to go
>down,
>>you buy puts. In case the company went to zero, who is then going to pay
>you
>>the money you can claim ?
>>
>>Any answers will be appreciated, thanks.
>>
>>:-) Marianne
>>
>++++++++++++++++++++++++++++++++++++++++++++++++++++++++
>
>I'd like to add a little to the discussion.
>
>So someone buys the put when the company is at 300. Okay.
>
>The company then goes to Zero.
>
>That someone's got a really high priced put. Very profitable...or is it.
>
>You could say sell that put and take the profit, but even before the stock
>hits bottom you'll have an extreme in the money option with very little
>liquidity. Seems like you might have a hard time getting rid of it.
>
>Okay, so thats out. So exercise is the next strategy. I think I'm right
>here, but let me know if I'm wrong. The put seller is charged with buying
>the stock back from me at 300, right? But if the stock is at zero, or in
>bankruptcy, or trading halted permanently, then how do I get the stock to
>sell him. If the stock were freely trading say at 10, then a trade could be
>made...here's your $10 stock I'm selling to you for $300. But for these
>purposes we can't get any stock for the putseller to buy. Follow me?
>
>So it sounds to me like we have some worthless puts.
>
>Or am I all wet?
>
>Thanks for the discussion.
>
>Bill Nakielski
>Milwaukee, Wisconsin USA
>
>
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