Re: [RT] Strange options on USB

["Ray Raffurty" <r.raffurty@xxxxxxxx>]

Hi Don,
 
After I received your e-mail I found the following 
article.  If I understand it correctly the UAZ series of options is based 
on 126 shares of the new USB stock plus $11.63 per contract to make up for the 
1/2 share difference.  If that is correct why is there such a huge 
discrepancy in price (4 to 5 times) between the USB and USZ series?  If 
someone exercised a USZ call they would get 126 shares vs. 100 shares for the 
USB series.  I would think the price of  a USZ call would be 
approximately 26% greater than for the USB call.
 
If that is correct I am going to sell all the USZAD 
calls at 4.10 that I can.
 
Good luck and good trading,
 
Ray Raffurty
 
 
 


  
  
    
    <IMG height=10 
      src="http://www.cboe.com/images/e_space.gif"; width=10 border=0><IMG 
      src="http://www.cboe.com/images/SecondaryHeaders/header-tools-stocksplits.gif"; 
      border=0>
      
        
        
          
            Research Circular #RS01-183
            March 20, 2001
            U.S. Bancorp ("USB/ adj. USZ/WBP/VBV") Determination of 
            Cash-In-lieu Amount
            Shareholders of U.S. Bancorp ("USB/ adj. USZ/WBP/VBV") and 
            Firstar Corporation ("FSR/YSR/OSR") approved a Merger between the 
            two companies to create a new company that will retain the U.S. 
            Bancorp name and stock symbol. Pursuant to the terms of the Merger, 
            each share of USB Common Stock outstanding immediately prior to the 
            consummation of the Merger was converted into the right to receive 
            1.265 shares of Common Stock of "New" U.S. Bancorp ("USB"). The 
            Merger became effective on Tuesday, February 27, 2001. The OCC has 
            informed that a whole share price of $23.261 was used in the 
            determination of cash-in-lieu amounts for fractional USB ("New") 
            shares.
            Contract Adjustments
            Pursuant to Article VI, Section 11, of OCC's By-Laws, all 
            outstanding USB/WBG/VBG options were adjusted as follows. As of 
            Tuesday, February 27, 2001, each adjusted U.S. Bancorp contract 
            requires the receipt or delivery of: (A) 126 shares of USB ("New") 
            Common Stock, plus (B) $11.63 cash in lieu of 0.50 fractional share 
            of USB ("New") Common Stock (based on a whole share price of $23.261 
            for USB shares). Premiums for the adjusted U.S. Bancorp options 
            continue to be calculated on the basis of a multiplier of 100, i.e., 
            for premium and strike-price extensions, 1.00 equals $100. The U.S. 
            Bancorp option symbols changed to USZ, WBP and VBV. [Any FLEX series 
            that may exist were adjusted in a similar manner to the standardized 
            option.]
<BLOCKQUOTE 
style="PADDING-RIGHT: 0px; PADDING-LEFT: 5px; MARGIN-LEFT: 5px; BORDER-LEFT: #000000 2px solid; MARGIN-RIGHT: 0px">
  ----- Original Message ----- 
  <DIV 
  style="BACKGROUND: #e4e4e4; FONT: 10pt arial; font-color: black">From: 
  Don 
  Ewers 
  To: <A title=realtraders@xxxxxxxxxxxxxxx 
  href="mailto:realtraders@xxxxxxxxxxxxxxx";>realtraders@xxxxxxxxxxxxxxx 
  
  Sent: Saturday, December 15, 2001 7:58 
  PM
  Subject: Re: [RT] Strange options on 
  USB
  Ray,Firstar Bank of Milwaukee recently (February 2001) 
  acquired/merged with USBank of Minneapolis (USB), however "U S Bank" was 
  the surviving name(Firstar had prior mergers/acquisitions with Mercantile 
  Bank of St. Louisand Star Bank of Cincinnati) likewise US Bank formally of 
  Seattle had priormergerd with First Bank of Minneapolis, with U S Bank 
  being the surving namethere also.The option difference is more 
  likely tied to the recent merger (Firstar andUS Bank). One representing 
  options pre-merger and the other after, since theacquisition was likely 
  not a 1 for 1 exchange, due to differences in stockprices the old options 
  would have to be converted to the new merged stockprice and likely given a 
  new symbol (USZ?).Since USB was the symbol for US Bank prior to the 
  acquisition and looking at<A 
  href="http://finance.yahoo.com/q?s=USB&d=o&q=B";>http://finance.yahoo.com/q?s=USB&d=o&q=B 
  ) it would appear USZ represents"old Firstar stock options".  In all 
  cases for the same strike the USZoptions have a much higher value, 
  indicate that in the acquisition, the newFirstar stock was at a lower 
  price or market cap, if I had to guess?don ewers----- Original 
  Message -----From: "Ray Raffurty" <r.raffurty@xxxxxxxx>To: 
  <realtraders@xxxxxxxxxxxxxxx>; "'Omega List'" 
  <Omega-list@xxxxxxxxxx>Sent: Friday, December 14, 2001 8:10 
  PMSubject: [RT] Strange options on USBWhile scanning for 
  possible option trades I came upon the following list forU.S. 
  Bancorp.  Note that there are two series, each with the same strike 
  andexpiration date, USB and USZ, but with considerably different bid and 
  askprices.  I suspect that the represent different numbers of shares, 
  perhapsfrom a previous split.Whare can I find out what USZ realy 
  is?  I checked with my broker and hecould not tell me (yes, I need a 
  new broker).  Also checked the CBOE website.Thanks in 
  advance.Good luck and good trading,Ray 
  Raffurty      02 Jan 17.50 (USB AW-E) 
  2.30 pc 1.60 1.80 0 2224 02 Jan 17.50 (USBMW-E) 0.25 pc 0.20 0.40 0 
  6596      02 Jan 17.50 (USZ AW-E) 6.70 pc 6.10 
  6.70 0 248 02 Jan 17.50 (USZMW-E) 0.25 pc 0 0.25 0 
  94      02 Jan 20.00 (USB AD-E) 0.75 pc 0.25 0.40 
  0 3934 02 Jan 20.00 (USBMD-E) 1.45 +0.20 1.45 1.65 10 
  2202      02 Jan 20.00 (USZ AD-E) 4.10 -0.30 3.50 
  4.10 3 1224 02 Jan 20.00 (USZMD-E) 0.45 pc 0.05 0.30 0 
  814      02 Jan 22.50 (USB AX-E) 0.05 pc 0.05 
  0.15 0 1306 02 Jan 22.50 (USBMX-E) 3.00 pc 3.60 3.90 0 
  1218      02 Jan 22.50 (USZ AX-E) 1.25 pc 1.55 
  2.15 0 571 02 Jan 22.50 (USZMX-E) 0.30 pc 0.55 0.80 0 
  203      02 Jan 25.00 (USB AE-E) 0.05 pc 0 0.15 0 
  7841 02 Jan 25.00 (USB ME-E)6.80 pc 6.00 6.40 0 
  3254      02 Jan 25.00 (USZ AE-E) 1.00 pc 0.45 
  0.70 0 1000 02 Jan 25.00 (USZME-E) 4.00 pc 1.65 2.25 0 
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