The stock for my call option had a spinoff?

Okay, I am fairly new to trading options..and this hasn't happened to me yet..

Yesterday (7/1/20) I bought a $15 call option exp 7/17/20 for OXY, and paid $2.78 ($278) for 1 contract.

I woke up this morning with a message stating that OXY had a spinoff. When I go to trade the option, it says I am allowed to sell, but I cannot buy. I was going to sell it this morning...but there is no volume...as in zero...yesterday at market close there were over 5,000 open interests...so what is everyone doing with their contracts?!? Also, the confirmation message that pops up before placing a order to sell to close says "You're selling your right to buy 1,200 shares of OXYW and 10,000 shares of OXY for a combined $1,500 by July 17."

I am so confused right now...the OXY share price right now is trading at $17.95 so 10,000 shares would be worth $179,500????? But the message is stating I can buy 10,000 shares (including 1,200 shares of OXYW).... I am either a confused idiot or a confused idiot sitting on a JACKPOT..lol...can anyone explain to me what's going on??

1 Answer

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  • 1 month ago

    I can give you a partial explanation.

    It appears clear that you are dealing with an adjusted contract (OXY2) The deliverables for that contract consist of

    1) 100 Occidental Petroleum Corporation (OXY) Common Shares

    2) 12 Occidental Petroleum Corporation Warrants

    3) Cash in lieu of 0.5 fractional OXY Warrants

    The message about "1,200 shares of OXYW and 10,000 shares of OXY" clearly refers to 100 contracts instead of 1 contract.

    See the OCC bulliten at

    https://infomemo.theocc.com/infomemos?number=47250

    I recommend you contact the OCC. For questions regarding this memo, call Investor Services at 1-888-678-4667 or email

    investorservices@theocc.com.

    It is not clear which option contract you bought yesterday.

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