Corporate events & settlement
What happens to options contracts during a corporate Merger and Acquisition (M&A) announcement?
By Easy Money Scanner · Educational reference · Not investment advice
The short answer
When an M&A deal is announced, OCC typically adjusts outstanding options to reflect the deal terms, converting contracts into cash, acquirer stock, or a combination once the merger closes, per OCC's memo process.
How it works
Prior to close, options continue trading reflecting deal-probability-adjusted pricing; upon completion, OCC issues an Information Memo detailing exactly how each series will be adjusted or cash-settled.
An example
When a company is acquired for $50 cash per share, outstanding calls become deliverable for $50 cash per 100 shares instead of physical stock delivery.
Risk & limitations
Adjusted options can become illiquid and hard to close immediately after a deal is announced, and terms vary by deal structure, so traders must read the specific OCC memo.
Examples are hypothetical, not trade recommendations. US contract and regulatory references do not automatically apply in Canada. Rules, margin requirements and broker policies can change; confirm them with the relevant authority and your broker.