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The buyout fell through. What happens to my options?

When a buyout fails before it closes, your options keep their normal terms. Nothing is adjusted, because the deal never happened. What changed is the stock price, and a short put that looked calm can now be deep in the money.

Options guide · 9-minute read · Updated 2026-10-28

What just happened in your account

You sold a put on a stock that had a buyout offer. It looked calm. The stock sat just under the deal price for weeks. Then the deal broke, and the stock fell to where it traded before the offer, or lower, in one morning.

Here's the plain answer first. Your option contracts didn't change. An adjustment only happens when a deal closes. A deal that fails before closing changes nothing about the contract: same strike, same 100 shares, same expiry.

What changed is the price. Your short Put option may now be deep In the money, and Assignment is likely.

This happens to careful people. The stock really was calm. The calm was the market pricing a deal that then didn't happen. For the full list of events that do rewrite a contract, see my hub on corporate actions and your options.

The numbers (hypothetical)

This is an illustration, not a trade idea. XYZ is a made-up stock.

• XYZ traded around $40.
• A buyer offered $50 a share in cash. XYZ jumped to $48.50.
• You sold one put, $47 strike, 90 days out, for $0.60. You collected $60.
• Your broker set aside $4,700.

A month later the buyer walked away. XYZ opened at $36. It fell below its old $40, because the reason for the break was bad news about the company.

With 60 days left, your $47 put is now worth about $12.00. That's $11 of Intrinsic value (the $47 strike minus the $36 price) plus about $1 of time value.

On paper, you are down $1,140: the put costs $1,200 to buy back, minus the $60 you collected.

Your three choices, with the numbers

None of these is free. They differ in when you take the loss, and what you keep.

1. Buy the put back now for $12.00. You pay $1,200. You collected $60. Realised loss: −$1,140. Your $4,700 is free today. You stop the bleeding if XYZ keeps falling.

2. Keep the put and take assignment. If XYZ is still at $36 at expiry, you buy 100 shares at $47. They're worth $3,600. With the premium, you're at −$1,040 on paper, and you own the stock at an effective cost of $46.40 a share.

3. Roll the put out in time. You buy back the $47 put for $12.00 and sell a $47 put five months out for, say, $12.80. That's an $80 credit. You've now collected $140 in total.

Here's how each ends, depending on where XYZ goes.

Look at the roll column. It collects a little more. It also keeps your $4,700 locked for five more months, on a stock whose deal is gone. The roll didn't fix anything. It moved the same loss later and added time for it to grow.

Rolling to a lower strike usually costs money up front (a debit), because the lower put is worth less than the one you're closing. See Rolling for how a roll works.

If you held shares with a covered call

The other common case: you owned 100 shares at $48.50 and sold a $50 call for $0.30.

When XYZ fell to $36, your shares lost $1,250. The call is now far out of the money and will expire worthless, so you keep $30. Net: −$1,220.

The contract is unchanged here too. You can buy the call back for a cent or two and sell a new one at a lower strike. But a strike near $36 would lock the loss in if the shares get called away. See selling covered calls on a buyout target for why the call couldn't cushion this.

How to choose

Take a breath before you click anything. A gap like this makes every choice feel urgent. Most of the loss has already happened, and nothing has to be decided in the first ten minutes.

Then ask three questions:

1. Would I buy XYZ at $36 today, with no deal? If yes, taking assignment is like buying the stock, just at a worse price than today. If no, buying the put back is the honest exit.
2. Can I afford to have $4,700 tied up in this stock for months? If not, close.
3. Is there a second buyer? Sometimes a failed deal brings another bid. Sometimes it doesn't. Don't pick a choice that only works if one shows up.

What not to do: don't sell more puts on XYZ to "make it back". That doubles the bet on a stock you didn't really want.

If you decide to keep the shares after assignment, the wheel strategy covers selling calls on them. My guide on options assignment shows each step of what lands in your account.

The rule for next time

The put paid $60. A broken deal cost $1,140. That's the shape of every put on an announced buyout target: a small payment for carrying the whole deal-break risk.

The rule that would have changed this:

In this example, that's a strike near $36 or $40. It would have paid a few cents. That was the true price of the risk, and the $47 strike just hid it.

For the other side of this, when the deal does close, see a short put when the stock gets acquired.

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