Pursuant to a news release issued this morning: (a) "Subject to the terms and conditions of the merger agreement, at the effective time of the merger, each share of Support.com, Inc. common stock issued and outstanding immediately prior to the effective time will be cancelled and extinguished and automatically converted into the right to receive 0.115 shares of Greenidge Class A common stock, plus cash in lieu of any fractional shares of Greenidge Class A common stock resulting from such calculation." (b) "The parties expect the pending merger to close and become effective at the close of trading on September 14, 2021 (subject to the satisfaction or waiver of all closing conditions contained in the merger agreement), and shares of Greenidge Class A common stock to begin trading on The Nasdaq Global Select Market under the ticker symbol 'GREE' on September 15, 2021."
In a nutshell, SPRT shareholders will be receiving .115 of GREE stock for each share of SPRT at the close of trading tomorrow (Tuesday). On Wednesday, SPRT shareholders will have GREE shares in their accounts (plus any cash resulting from the rounding off of any fractional shares).
So, what happens to SPRT options contracts holders?
The Options Industry Council provides an example:
"he shareholders of company JKL Inc. have approved a takeover bid placed by Global Giant Co. As a result, holders of JKL stock will now be entitled to .50 shares of Global Giant for every share owned of JKL Inc. Therefore, holders of JKL call options will now be entitled to a deliverable amount of 50 shares of Global Giant for every contract of JKL that they own (100 shares per contract x .5 Global Giant). Investors with short positions in JKL call options are then responsible for delivering 50 shares of Global Giant for every call option assigned."
In the case of SPRT contracts, then, they will be adjusted to GREE 11.5 share contracts (100/.115 = 11.5) or, presumably, a rounding thereof. In other words, SPRT contracts that previously "controlled" 100 shares of stock, will now only control 11.5 shares of GREE (presumably rounded to 11, with the .5 shares being paid out as "fractionals"). These "nonstandard," 11-share contracts will float around in the market for a while until they're disposed of one way or another, either by closing, execution, or assignment.
Consequently, SPRT options contract holders could be in for a mess if they hold these contracts into Wednesday's session. For one thing, nonstandard contracts can experience liquidity issues, since -- as time progresses -- there's less and less of a market for them. I mean, who wants to trade an 11-share contract?
Secondarily (and probably more importantly), we literally do not know the share price of GREE at this point in time unlike where, for example, UVXY experiences a reverse split and we pretty much know where the underlying will open post-split with some relative degree of certainty given the previous day's close. Consequently, it's difficult to determine whether -- relative to GREE's future price action, staying in even a goofy, nonstandard contract could end up being "the thing to do." Put another way, do I want to hang out in 20 strike, 11 share calls when GREE's going to be trading at $10, for example?
For my part, I'm going to be exiting my little SPRT position tomorrow at open, even if I have to scratch it out or take a small loss. One thing I don't like is having nonstandard contracts in my account. If GREE turns out to be playable, it's best to start out with a clean, standard contract play.
In a nutshell, SPRT shareholders will be receiving .115 of GREE stock for each share of SPRT at the close of trading tomorrow (Tuesday). On Wednesday, SPRT shareholders will have GREE shares in their accounts (plus any cash resulting from the rounding off of any fractional shares).
So, what happens to SPRT options contracts holders?
The Options Industry Council provides an example:
"he shareholders of company JKL Inc. have approved a takeover bid placed by Global Giant Co. As a result, holders of JKL stock will now be entitled to .50 shares of Global Giant for every share owned of JKL Inc. Therefore, holders of JKL call options will now be entitled to a deliverable amount of 50 shares of Global Giant for every contract of JKL that they own (100 shares per contract x .5 Global Giant). Investors with short positions in JKL call options are then responsible for delivering 50 shares of Global Giant for every call option assigned."
In the case of SPRT contracts, then, they will be adjusted to GREE 11.5 share contracts (100/.115 = 11.5) or, presumably, a rounding thereof. In other words, SPRT contracts that previously "controlled" 100 shares of stock, will now only control 11.5 shares of GREE (presumably rounded to 11, with the .5 shares being paid out as "fractionals"). These "nonstandard," 11-share contracts will float around in the market for a while until they're disposed of one way or another, either by closing, execution, or assignment.
Consequently, SPRT options contract holders could be in for a mess if they hold these contracts into Wednesday's session. For one thing, nonstandard contracts can experience liquidity issues, since -- as time progresses -- there's less and less of a market for them. I mean, who wants to trade an 11-share contract?
Secondarily (and probably more importantly), we literally do not know the share price of GREE at this point in time unlike where, for example, UVXY experiences a reverse split and we pretty much know where the underlying will open post-split with some relative degree of certainty given the previous day's close. Consequently, it's difficult to determine whether -- relative to GREE's future price action, staying in even a goofy, nonstandard contract could end up being "the thing to do." Put another way, do I want to hang out in 20 strike, 11 share calls when GREE's going to be trading at $10, for example?
For my part, I'm going to be exiting my little SPRT position tomorrow at open, even if I have to scratch it out or take a small loss. One thing I don't like is having nonstandard contracts in my account. If GREE turns out to be playable, it's best to start out with a clean, standard contract play.