#1
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hypothetical options and stock split situations
say you buy 100 shares of a stock at $50/share. You sell a call option with a strike at $45 for $8 with expiraton of January 07. Then the stock splits 2 for 1, what happens to your options?
say shareholders of record on July 31 will receive one additional share of common stock for each share that they own (2 for 1). The shares will be issued Aug. 14. You buy shares on August 4th, but stock prices are still at a presplit price. How does this work that you dont get screwed? thanks so much |
#2
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Re: hypothetical options and stock split situations
The number of contracts and the strike price is adjust.
Here is the link to the CBOE that announces the adjustments, Contract Adjustments |
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