How do Corporate Actions affect my options position?
It’s not always clear what will happen to your options position when the underlying stock undergoes a corporate action, so please keep an eye on OCC Memos for any changes that may impact your options position. https://www.theocc.com/.
Normally, your options position will change based on the following rules, but please refer to the OCC official website for final confirmation.
Security A changes its symbol to B, the available symbol A 20991231 Call 10 will become B 20991231 Call 10. You will buy 100 shares of B upon exercise.
For example Name/Symbol/CUSIP Change Option Symbol: CLA New Symbol: OUST
Reverse Stock Split
Symbol A undergoes a reverse split at 1:10. The available symbol A 20991231 Call 10 will change to A1 20991231 Call 10. You will exercise based on the old symbol A1 and transfer to A at the split rate. Buy 100 shares of A1 at $10.00, you will then receive 10 shares of A with an opening position price of $100 as a result. The total market value will stay the same.
For example JUST ENERGY GROUP INC. - REVERSE SPLIT OPTION SYMBOL: JE NEW SYMBOL: JE1
Forward Stock Split
Option symbol changes will vary according to the ratio of stock splits.
If the split ratio results in a round number, such as 2 for 1, the total cost to exercise stays the same. 1 contract of A 20991231 Call 10 will become 2 contracts of A 20991231 Call 5. Buy 200 shares of A at $5 upon exercise.
For example APPLE INC. - 4 FOR 1 STOCK SPLIT OPTION SYMBOLS: AAPL
If the split does not result in a round number, such as 3 for 2, SPC will multiple by the split ratio, 100*1.5 = 150. You will buy 150 shares of A at $6.67. 1 contract of A 20991231 Call 10 will change to 1 contract of A1 20991231 Call 6.67.
For example SF 3For2 Stock Split
While a special dividend is non-recurring, traditional dividends are usually more regular (e.g., monthly or quarterly), and the dividends or distributions normally will be more than 25% for ex-dividend dates.
The distributions will be reduced from the strike price. For example: a dividend of $5.80, A 20991231 Call 10 will become A 20991231 Call $4.20. You will buy 100 shares of A at $4.20.
For example Cash Distribution Option Symbol: SC