What is the impact of Corporate actions on futures and options?
Corporate actions, such as Bonus, Rights, Extra-ordinary dividends, Merger/Demerger, Amalgamation, Splits, and Consolidations, will lead to adjustments in the futures and options contracts of the underlying stock involved in the corporate action. To learn more, visit nseindia.com/products-services/equity-derivatives-corporate-actions-adjustments.
These adjustments ensure that the value of market participants' positions remains as close as possible to the original value on the ex-date of the corporate action. Adjustments will involve changes in the base price, option strike values, and the market lot, depending on the adjustment factor. In some cases, adjustments may also result in the modification of the contract's expiry date, where the contract will be force closed before the original expiry date, and adjusted contracts will be introduced for trading instead.
The specific adjustments required will depend on the nature of the corporate action. All open positions will be subject to these adjustments to maintain fairness and consistency in the market.