I would expect the price to stabilize at or near $3.85,...

I would expect the price to stabilize at or near $3.85, rendering the entitlements nearly worthless during the trading period.

If the entitlements are down near zero, I can pick up a mountain of them from discouraged, naïve investors.  Then I can exercise them and any improvement in the SP above the $3.85 exercise price is clear profit.

Of course, I expected this to happen with Arrium.  But when the SP whistled straight on past the TERP of $0.52, it should have been clear that the CR was a disaster and the SP wasn't the result of the kind of manipulation I just described.

So my suggestion is to watch this for a couple of days.  If the price stabilizes around the exercise price, we might be good to go and slurp up cheap entitlements.  Even if you let them expire you might still get a nice windfall.  If the price falls more than 25% below the exercise price, we might think about picking up shares rather than entitlements.

Anything can happen in this situation.  Typically the early movers will lose.