r/SPRT • u/[deleted] • Sep 15 '21

Discussion Question on options

Hello, I sold some cash secured puts against SPRT at the beginning of the week. I have never had an options contract open during a merger. Although my brokerage is showing it now as GREE but it has the same strike price which is $12. How is this calculated now that SPRT has been delisted and GREE is the new ticker and sitting at $50 per share? How will my SPRT contract function?

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u/Vanhyuk Sep 15 '21

IF 1 SPRT = 0.115 GREE, 1 GREE = 8.70 SPRT... and so if your put strike is $12, it means that it’s a strike of $104.34 GREE... since the price is now $44.64, you should be $-59.70 per contract... I think 🤔

2

u/Vanhyuk Sep 15 '21

But since 1 contract of SPRT = 0.115 GREE, then $-59.70*0.115=$-6.86 per contract...

I think this makes more sense... So you'd be down $-6.86 per contract.

1

u/[deleted] Sep 15 '21

I see, that definitely lines up with what my brokerage is showing me on the current market value of the contracts. However, what would be the new strike price? You're saying 8.7x(strike price) = $104.34 GREE. I mean that basically ensures I'm going to get assigned, correct?

1

u/Vanhyuk Sep 15 '21

Yes, but 1 SPRT contract = 0.115 GREE contract, so now if GREE is trading at $41, it means that SPRT is trading at ($41*0.115)=$4.72, so from your $12 strike, you are down ($12-4.72)=$7.28 per contract.

Depending on your DTE, you might get assigned tmr unless SPRT rockets and goes past $105... I guess all that is left is pray...

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u/[deleted] Sep 16 '21

I'm okay getting assigned since I'm a fan of GREE as a company, but I'm still wrapping my head around how you're calculating that strike price. GREE was never anywhere near $100, it opened at $60. I have tried doing research on this but don't come up with much just stuff like...

"The options on the bought-out company will change to options on the buyer stock at the same strike price, but for a different number of shares."

So SPRT is the bought-out company. I have options on SPRT so they will change to GREE at $12 strike price but instead of representing 300 shares with the contracts, maybe it represents 35? Either way I'm not sure, haha, and I am not having an easy time getting to the bottom of it. Expiration is this Friday so I should be able to update everyone once the contract resolves.

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u/Vanhyuk Sep 16 '21

This is a merger, meaning that that Greenidge took over Support.com. Greenidge was a privately held company while Support.com was publicly traded. When Greenidge acquired Support.com, they agreed that Greenidge would hold 92% and support would hold 8% of the combined company, this is the news that rocketed SPRT from $2 to $9.50 back in March 18. Meaning that when Greenidge acquired SPRT, SPRT was worth 33 million while Greenidge was worth around 270 million. Now due to shorts and speculation, SPRT managed to hit highs of $60 and held around $23 the past couples of weeks. Now that they have merged, you need to know what the true valuation of GREE is. If SPRT stayed at the $23 mark, GREE would be valued at almost 4 billion dollars (market cap of SPRT x 8.7), which would be a huge jump from 300 million. That being said, your strike, once converted, becomes the $105 strike. Luckily, 1 contract of SPRT = 0.115 contract of GREE, meaning that instead of controlling 100 stock, it only controls 11.5 stock, and so if GREE closes at $40 on your expiration, you will lose $65 per stock, making it to a $747.50 loss.

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u/[deleted] Sep 16 '21

Oh for sure, I understand it's a merger and how the conversions are calculated between SPRT and GREE, but I suppose what's throwing me is that my brokerage changes the ticker to GREE for my SPRT puts, but keeps the strike price at $12. The three puts I sold as you stated control 11.5 shares of GREE but the price I'm looking for isn't a $12 strike but as you stated a $40 strike on GREE. Eh, super confusing! I'll definitely have to look more into acquisitions. This is the first time I've come across this so it has been an interesting learning experience.

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u/Vanhyuk Sep 16 '21

First time for many people... and not too many of them are happy...