Petrobank spinoff II: What happens to an option contract?

In a previous post, I wondered what happens to an options contract after a spinoff. Petrobank spun off Petrominerales–its Columbian holdings.  I figured, based on the rules, that if my puts were assigned I would receive 100 shares of Petrobank and 61.5 shares of Petrominerales, and then learned that the Montreal Stock Exchange confirmed my analysis.

Saturday the January contract expired.  PBG closed at $23.38 and PMG at $37.27; thus the closing price for the underlying  = 23.38 +37.27*0.615=$46.30.  Well, a newbie in the backroom of the options desk at my brokerage decided my January $42 was in the money and exercised my contracts, charging me the $42 per share of Petrobank plus a $43 commission.   Obviously, Petrobank at $23.38 was deep in the money, right?  $23.38 is a lot less than $42.00.   This is the note in my activity (with amounts whited out):

Apparently, not everyone in the backroom knows what she’s doing and somebody a little smarter decided that this assignment better be canceled.  I never did get my 61.5 shares of Petrominerales (per contract). But hey, guys, if you want to assign me 100 shares of PBG and 61.5 shares of PMG, I’d happily receive them for the price of 100 shares at $42.  That would be a net gain of $4.30 per share.  I’ve heard that once in a blue moon a novice options buyer will exercise an out of the money option–for the seller, this is a gift.

My final thoughts on this is that after a bit of experience, it is very possible that the DIY trader will know more about options than some of the people working the options desk at the brokerage.  When I first started out, I asked about the commission rates upon assignment/exercise–not just once but several times.  Each representative gave me a different answer: one said standard commission, others said they didn’t have any idea, others said $43–but what about multiple contracts?  No idea.  etc. etc. etc.  I finally stopped trying to get a definitive answer and just waited.  My contracts that did expire in the money were charged $43 (the DIY rate) upon assignment and this was for multiple (5) contracts in the same order.  So the actual event helped me to formulate a better cost analysis.