What is the impact of corporate actions on F&O contracts?
Corporate actions like bonus issues, rights issues, extra-ordinary dividends, mergers, demergers, etc., will result in adjustments in F&O contracts of the respective underlying stock.
- Any corporate action adjustment will be carried out on the last day a security is traded on a cum basis in the equity market, after the close of trading hours.
- Adjustments will be in a manner that the value of positions in the given contract will continue to be the same.
- Depending on the adjustment factor, it will result in a change in the base price, options strike values & market lot.
- Adjustments may result in a change in the contract expiry date as well, wherein the contract will be forced to close before the expiry date and the adjusted contracts will trade instead.
- After Market Orders (AMO) placed on days prior to the ex-date will not go through due to a revision in the lot size. Such orders will be rejected.
- The average rate for futures positions shown on our trading platforms will be the original execution rate & not the corporate action adjusted rate. Hence, traders can refer to the closing rate in the Daily P&L column to determine actual profits & losses from the last settlement day. It can also be verified in the P&L Statement available on MyGeojit.
Keep track of corporate actions and adjustments on our Notifications page or on the OptionChain window on TraderX.
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