I have a short position/puts which i was unable to close/sell as you cannot trade. Has anyone dealt with this type of situation?
Not financial advice but what I expect to occur: If the bank is sold or liquidated before expiry your options may settle at that price. Else you will be closed out at the last tick the stock traded. You can try to sell your options OTC, but a short will probably be closed out at last tick-not sure.
Once fdic comes in picture, you cannot sell the bank.
I meant when the FDIC sells or liquidates the bank
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Yes - the OCC will determine settlement for puts. Shorts can be more painful as you need to deliver shares and will accrue borrow along the way.
Wait a minute isn't this the best case scenario for puts? You borrow a stock from someone and sell it. Stock is worthless. You win. No?
Has to settle - if you don’t have the shares to deliver at expiry it’s a problem, since you can’t just say “I want the cash value instead” - that’s not how it works. For option contracts the OCC comes up with whatever they feel to be the most reasonable settlement, taking into account how things ultimately pay out. For outright shorts, there’s no OCC as a referee - before you can lock in your gain, you have to buy back the shares, which is currently impossible. The proper settlement value of these is often subject to litigation 😅