nothings going to happen until febuary either way imo.
unless the knicks offer is head and shoulders above what everyone else if offering im pretty sure the nuggets aren't going to trade him there because they don't want to reward melo and let him dictate where he's going to go when their getting 20 cents on the dollar for it.
eventually though unless they wanna end up empty handed in july their going to need to make a move. there's no way in hell melo stays, at best their a 2nd round team and it would take alot of changes to be made there for him to even consider.
if im the knicks unless behind the scenes there's a for sure agreement that melo is going to sign with the knicks in july and the knicks are 120% sure he's going i try to make a trade for him now if i have even the smallest of doubts that he might go elsewhere. aside from amare i'm not putting anyone else on a pedastal in a potential trade as well, you have a chance to get a top 10 player in the league who you can make an argument for being top 5 depending on your opinion you get that guy however you need to, and again unless your completely certain he's going to sign with you in july you try and make a move now, denver is going to get more desperate as it gets closer to the trading deadline.
still i don't believe the he'll only sign the extension if he goes to new york talk. i could see chicago winning him over, dallas is mark cuban is able to work his magic, and the lakers if they were able to get the space (yes the laker part is a pipe dream but if the oppurtunity is there i could see melo looking at it)