If a stock does a reverse split and the price fo thes stock is increased due to the split, what happens to call options that are a year out? If the reverspe split put them in the money, do the options contracts remain the same? for example I have 190 contracts $12.50 call option for 2011. The stock is 4 dollars, a reverse split takes the stock to $15.00 am I in the money, what happens top the option?
You call options will be adjusted using the ratio method by the OCC. The exact adjustment method would have to be announced by the OCC themselves. Read more about options and stock splits in the link below.
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No, the underlying option adjusts to match the stock.
If the reverse split was 1 for 4, you will have 47.5 contracts instead of 190.
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