Modifying options agreements following a stock split

11/10/2022 4 min

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Episode Synopsis

Changing options agreements following a stock split
Options contracts' values will alter because of a stock split. This modification may occasionally be significant. For instance, if the price of the underlying stock drops to 100 USD, an ATM call on a 200 USD stock would be worthless. However, if interest rates, liquidity, or any other factors don't affect the stock price, then this situation is the best-case scenario.

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changing the choices, A variety of factors need to be considered when negotiating contracts following a stock split. The sort of split comes first. Stock splits and reverse splits are the two forms of splits. A stock split affects the strike price and total number of contracts.
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