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.