I called Cboe and spoke with their exchange representative this morning. He said the stock is halted due to a regulatory halt, but that shouldn’t impact whether I can exercise my options. He then passed me to the Cboe regulatory division and I am awaiting their return call. I will call again this afternoon if I don’t hear back first.
I then called the OCC and they refused to talk to me on the phone because I was an individual investor. I explained that shouldn’t matter and they should be able to speak with me just like anyone else. I suggested that having my lawyer call their lawyer might be an acceptable outcome. They are now looking into RSX and expect to update me tomorrow on what they are going to do.
I also spoke with an attorney who deals with securities and derivatives. It does seem like the worst case scenario is that the transaction is unwound: I get my money back and don’t get my profit. That is not an acceptable outcome, but it is acceptable as a worst-case scenario.
I also spoke with TD this morning. They are currently trying to find out what they need to do in order to provide written notice to Cboe of my intent to exercise a put option and will report back.
Finally, I have a call into Webull and will report back.
Short answer: this is Monday morning. Long week ahead. But everyone is on their heels and is freaking out. When the TD rep suggested my options would expire worthless, they backed off that statement within 15 seconds of me telling them I’m a lawyer.
What I shared on TF. 9PM EST I’ll post up the official 3/7/22 reporting from VanEck when they update.
TLDR: NAV isn’t really moving. I estimate still at $0.925 - $0.93 even with the minor uptick in the 3 stocks that are still trading.
Update for RSX Holdings now that 3/4/22 holdings are out and LSE is closed for the day.
#1). EVR / POLY holdings have been trimmed [(7mil shares of EVR (nearly 74% reduction) and 1.1mil shares of POLY (nearly 20% reduction)].
#1a). As a result of them selling EVR/POLY, their cash position increased from 2.76mil to 11.16mil.
#2). ALRS/IRAO/MOEX/RASP/RTKM/TCS (essentially all the RU listed stocks seem to be calculated from 3/3 to 3/4 with a 15% reduction)
#3). Due to trimmed positions, my estimated calculated NAV remains at $0.93. (Even if I factor in the same 15% reduction with those 6 RU stocks, estimated calculated NAV would be $0.925.)
I just got off the phone with Schwab. From what I was told- they are going through the OCC cash settlement system.
This already may have been described but for the sake of my reply:
So the way he described it to me was- When the OCC determines a settlement price- whatever that settlement price ends up being- you take that price minus your position X100.
I asked him how is that price determined- he said typically it is the closing price but they aren’t sure based on how all these Russian stocks/etf’s are being handled.
While it makes sense that brokers are waiting for word from the OCC, we should also remember the possibility that Van Eck will be forced to liquidate RSX, and that it might unhalt. My understanding is that the OCC’s role is to get involved only when there is an indefinite halt or other event that makes pricing options (or exercising them) impossible without the OCC stepping in.
Gah damn Phil. Way to lay ur massive Supreme Court of The United States Judge balls on their foreheads. Incredible stuff out of u. Good work Mr Phil. Valhalla and I appreciate your work and update. Good shit :pepepray x3
Here is my communication to the OCC. I will let you know when I receive a response.
Hello:
My name is [Machetephil]. I am an individual investor and attorney who is currently holding 200 put option contracts on RSX at a strike price of $5 with an expiry of this Friday, March 11. On Friday, March 4, 2022, after market close, Cboe halted trading of RSX due to a “regulatory concern”. Currently RSX is trading at 550% of NAV, which is approximately $0.89. RSX is trading at $5.65 as of market close on Friday, March 4.
I fully intend to exercise my 200 put options and want to know how the OCC intends to handle this. The stock is trading at an elevated price. VanEck will announce that RSX is being de-listed just like the exchanges announced with RUSL on February 28, 2022. Van Eck will liquidate RSX. Shareholders will receive approximately $0.89/share or less. Please let me know what the OCC intends to do with options on RSX that have a 3/11 expiry. My options are current OTM, but at $5 are significantly above NAV.
I sent a similar email as @Machetephil above (I had his permission to use his as a template, while using my own positions and obviously removing the part about being a lawyer) and already got a response. Pretty generic response we’ve already seen.
They say there’s no trading restrictions on the options, but those are definitely halted as well. At least on IBKR, TD, and from what everyone here is saying.
Also, how fucking sick is it that this guy’s last name is Cashman?
As of this post, RSX remains halted. I expect to receive more information tomorrow from the OCC and Cboe. As of now, my suggestion is to figure out what you need to do with your individual broker to be ready to exercise your put options. Otherwise, relax and let’s see what information we gather tomorrow.
Just to add RH’s response to this query - I basically sent a version of Phil’s message inquiring about how to exercise my ITM put options - here is their response -
Thank you for your message! I’d be happy to help.
If RSX is halted, options orders will typically be halted as well. This is not up to Robinhood but rather the trading exchanges in which accept orders. As for the determination of what will happen upon expiration, Options contracts are standardized by the Options Clearing Corporation (“OCC”) and then listed on Robinhood thereafter. You can search the OCC websitefor contracts you’d like to trade, and they will typically appear on Robinhood if they appear on the OCC website.
If the exchanges begin accepting orders again, you may be able to close your contract prior to expiration, but if not it is ultimately up to the OCC as far as what happens come expiration.
I hope this helps shed some light! Simply reply if you have any additional questions, as always: we’re here to help!
Sincerely,
Matthew
To which I replied -
“Thanks Matthew. And what will robinhood do if I wanted to exercise my put option?”
And the reply -
Happy to clarify!
Since you don’t hold the shares long, you wouldn’t be able to exercise the contract as you would be selling 100 shares at the strike price. You can still try to submit closing orders if the security begins trading again, but we are not sure if or when that may be.
I know it’s not the most clear situations, sometimes we have to wait and see what the OCC says about what will happen at expiration with in the money contracts. Please let me know if you have any follow up questions, I’m happy to help!
Sincerely,
Matthew
So basically, to me it seems like the brokers have no idea what to do and are waiting for guidance from OCC. I know this doesn’t add a lot of info, but I figured I’d post this here for Robinhood users.
It’s funny, because based on the answer I received from OCC, it sounds like they’re punting options exercising back to the brokers.
Here’s the excerpt from my email:
In fact, OCC has not placed any restrictions on exercising RSX options.
…
However, your trading firm may have a restriction in place whereby they prohibit you from exercising your puts, unless you are already long stock, as a method to control their operational risks. Please note that if this is the case, the restriction comes from your trading firm and not OCC.
This reminds me of the LFIN thread on reddit. OCC and brokers kept kicking the ball between each other.
Ultimately, many people were able to exercise their long put options but then got stuck with open shorts (including nasty borrow fees) until it was moved to the OTC market and resumed trading.
This is definitely one of those wait and see things
I would say expect the worst - all your (our) puts expire worthless and hope the best - you (we) get cashed out at the strike price.
Checking www.theocc.com (thanks @dialoguehealth for pointing to the non www version doesn’t resolve) for any new memo’s is probably good start because it seems no broker has any idea on what to do.
Since it was suspended from trading I guess they don’t plan on updating.
Nonetheless, without any of the other stocks starting back up aka MOEX re-opening / LSE resumes trading / or a massive swing in 3 of the stocks that are still active (albeit those 3 stocks account for 21% of its current value), I don’t forsee the NAV value changing that much.
I have also been checking the OCC website or memos/notice with no new updates and no new SEC filings for the VanEck ETF Trust for any relevant RSX updates.
We shall have to see if the OCC has some direction or some news they can release come tomorrow.
Is there any scenario where RSX would just be unhalted and continue to trade, or is it more probable that there is a cash settlement or puts are just worthless?
I saw the tweet from earlier mentioning Putin was planning to reopen MOEX on Wednesday. Assuming it does fully open and this isn’t just a ploy to get oligarchs out of their positions, it’s possible that the halt on RSX’s underlying securities resume and as such it can go back to trading as normal (in which case it’ll probably realign with the NAV somewhere in between the current price and the current NAV.) Unless the underlying securities of RAX resume trading there is no reason to believe (imo) that it’ll simply unhalt.
