Ann: Change in Substantial Holding, page-20

I would expect Macq's short position in stock should decrease... the options would have had delta near -1 as they are so far out of the money, so Macq would have already been short. Buying the stock on exercise also closes out that part of the short, but I didn't see any large trades, so my guess is that they cash settled rather than physical delivery. ie, Macq gives cash in lieu of stock to Waterhouse (probably in the form of reducing the cash loan and keeping some of the stock that Waterhouse lent to Macq) - you reduce my debt by some and you can keep some of the stock I lent you... no cash or stock actually moves, thought the economic outcome is the same.