Question

How does a stock split affect my options contracts?

Answer

Existing options contracts are typically adjusted to reflect the new share price and quantity. If you hold a call option on a stock that executes a 4-for-1 split, you would generally end up with four contracts at a quarter of the original strike price. The total economic value of the contracts remains the same, but the terms change. Confirm the updated terms with your broker or plan administrator after a company announces a stock split.

About Mercer Advisors

We exist so you don’t have to worry about money. For more than 40 years, we’ve taken the sophisticated, time-tested approach that many ultra-high net worth individuals use to help manage their financial lives and made it accessible to more families.

Want to learn more about Mercer Advisors?