busterbluth

If it halts, there would be no option trading, worthless or otherwise.

Ok, this is as real a situation as it gets because it happened to me! In the above senario of a stock trading at $12, option with a strike of $12.50 trading at $1, then dropping to zero (or near zero) the next day occurs if after closing another company announces its acquisition of the company for $12.50. If it is strongly believed the acquisition will go through, option price drops to zero because volatility drops to almost zero.