What You Will Learn (1 of 2)
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This class will cover adjustments that are typically made to option contracts when the underlying stock undergoes a stock split, pays a special cash and/or stock dividend or distribution, or is involved in a merger, acquisition or corporate reorganization. What you will learn here are not hard and fast rules that will apply to each kind of event. In real life, the details of each event can vary, requiring slightly different contract adjustments to account for them.
Instead, this class is full of hypothetical scenarios that outline typical adjustments for typical stock splits, dividends & distributions, and mergers & acquisitions. A thorough review of this class's contents will prepare you for what you might encounter if an option contract you either currently or anticipate having a position in requires adjustments to its contract terms. Both The Options Clearing Corporation (OCC) and each of the exchanges that list adjusted options issue bulletins that outline in detail the adjusted terms. It is with information from these publications, as well as from your brokerage firm and/or financial advisor, that you should make all investment decisions.
The subject we are covering here can be complex, and the discussion lengthy. However, it is arranged so that you can easily access the type of underlying corporate event that you wish to learn about. For access to any particular subject, feel free to use the menu above. It is recommended, however, that if you are interested in a specific event (e.g., a 3 for 2 stock split) you read all the material that covers events of that type (e.g., all types of stock splits). It is in your best interest to be as informed as you can be before moving into the marketplace and buying and/or selling an adjusted option contract.
