What happens to options in case of a stock split?
When there is a stock split, MX will generally do two things: it will increase the number of contracts outstanding and it will cut the strike prices of these options. For example: If stock ABC announces a split of 2 for 1 and you own one call (representing 100 shares) with a strike price of $50, MX will credit your account with two calls (representing 200 shares) and it will reduce the strike price of those calls from $50 to $25. There is no beneficial change to the holder of the calls. In the case of a reverse stock split, or consolidation, MX will credit your account with the adjusted number of options and it will adjust the strike prices in the same way as for a split. The Exchange issues, close to record date, a circular dislosing all details of the stock (and option) split, i.e. the ex-distribution date, the payable date, etc.
