What is the impact of Corporate actions on futures and options?
Corporate actions like Bonus, Rights, Extra-ordinary dividends, Merger/Demerger, Amalgamation, Splits and Consolidations will result in adjustments in the futures & options contracts of the underlying stock which is undergoing the corporate action.
The basis for any adjustment for corporate actions shall be such that the value of the position of the market participants, on the cum and ex-dates for the corporate action, shall continue to remain the same as far as possible.
Adjustments will result in a change of base price, option strike values & the market lot depending on the adjustment factor. In a lot of cases, adjustments may result in the change in date of expiry of the contract as well i.e contract will be force closed before the expiry date and the adjusted contracts will trade instead.
The adjustments would be carried out on any or all of the above, based on the nature of the corporate action. The adjustments for corporate actions would be carried out on all open positions.
Note: After market Orders (AMOs) placed on days prior to the ex-date will not go through due to revision in lot size. The order will be rejected with the following error - "Order Rejection status will be 16273 : Record Does not exist"
To learn more about this refer to this page on the NSE website.
You can keep track of all adjustments and corporate actions on our Bulletin & circular page. You can also subscribe to NSE circulars.