Reader Question: What Happens Now That Sara Lee No Longer Calls?

A reader writes:

my broker cannot help me I had 6 calls 20 of SARA LEE due july 21 company was spinoff and is now hilshire SLE to HSH my calls are not listed anymore Am i eligible to the $ 3.00 per share bonus ? I want to sell my calls but there was a reverse split 1 for 5 do I still have 1.2 calls of 100 shares thanks for your answer

This is a good question, and probably one we should address more frequently.  Basically, a spinoff creates an “adjusted option”. What this means is that the deliverable(normally 100 shares of the underlying equity) is adjusted to reflect a package.  In this case, according to the Options Clearing Corporation, the deliverable for each of your 6 contracts is 20 shares of Hilshire Brands(HSH), and $1528.81 in cash($300 for special dividend, and $1228.81 for the value of the distributed CoffeeCo shares).  The exercise price should remain unchanged. Please see this document from the OCC for further details, or speak with your financial adviser. Our information is not warranteed as accurate, but we believe the OCC to be the data source of record here. Do any other readers have experience with this issue?

Disclosure: The author owns shares of HSH


One thought on “Reader Question: What Happens Now That Sara Lee No Longer Calls?

  1. E S

    mine dutch broker told me that the ex dividend date of SARA LEE was on the 12 th of june 2012, record date – 2 days and any transactions made between the 12 th till 28 th of june are not entitled to the dividend

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