If You're Caught Holding Halted Options

Knowledge Pays Dividends

Dividends offer another example of why it makes sense for option owners to retain exercise rights on halted stocks. The OIC's Huddlyston cited the situation during the week of Sept. 11, 2001, in which the entire equities market remained closed for four days. While it was not an expiration week, several stocks, most notably Altria(MO) (aka Philip Morris), went ex-dividend during that period. It was important for call option owners to be able to exercise if they wanted to be a holder of record and qualify for the quarterly dividend payment.

Huddlyston added this insight on options on companies that declare bankruptcy. He said that options will indeed continue to trade as long as the underlying shares remain publicly traded, even if it is only the the over the counter or bulletin board market. Once a company's shares are set for a complete delisting, the options will remain open to facilitate closing transactions for a specified period of time.

What are some good sources -- both books and Web-based -- where I can learn more about delta-neutral, volatility-based and other trading strategies?

To paraphrase movie critics: If you were to read just one options book this year, you can't go wrong with Sheldon Natenberg's Option Volatility & Pricing: Advanced Trading Strategies and Techniques. It remains, if not the definitive, one of the best and most popular books on options, combining both theory and application.

For a slightly more investment-oriented book, I would recommend Options as a Strategic Investment by Lawrence McMillan.

I'll also repeat the suggestion above that everyone should take advantage of the Options Industry Council Web site and hotline. The OIC has no agenda and is totally agnostic in that it does not promote any specific strategy, exchange or firm over another. Its only mission is to spread the word regarding how letting options into your trading practices can provide a more rewarding investment experience.

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