Check this out, this is taken from OIC Education Class-> contract adjustment. Do youself a favor, take this free class. If your broker said you can pay 85*10 to get 85 shares, let him/her write it down, so you get 150 per contract. Stock Splits: "Other" Splits (16 of 17) 1 for 10 reverse split Before a 1 for 10 reverse stock split, an investor holds an option, call or put, on 100 shares of XYZ stock with an exercise price of $10. After adjustment for the split, the investor will hold one XYZ option on 10 post-split shares, but with the same exercise price of $10. For an Option Holder: # of Contracts Strike Price Multiplier Aggregate Value Pre-split Aggregate Value: 1 x $10 x 100 = $1,000 Post-split Aggregate Value 1 x $10 x 100 = $1,000 In this case, an XYZ stock investor is issued 1 share of stock for each 10 outstanding shares of stock already held, so the contract's unit of trade is adjusted to 10 shares of the underlying stock. The number of contracts held, the strike price, and the aggregate value of the investor's option, $1,000, remains the same. However, upon exercise of this post-split option, 10 shares of post-split XYZ stock will change hands at the $10 strike price, effectively at $100 per share ($1,000 ÷ 10 = $100). For Covered Call Writer: # of Contracts Unit of Trade # equivalent shares XYZ shares held Pre-Split: 1 x 100 shares = 100 vs 100 Post-Split: 1 x 10 shares = 10 vs 10 In this case, the ratio between the option's equivalent number of shares and XYZ shares held and covered by the written call options remains 1 to 1. Detailed Scenario Below is a chart indicating typical adjustments to symbology and unit of trade for XYZ January options after a 1 for 10 underlying stock reverse split. Existing Series 1 Contract / 100 Shares Adjusted Series 1 Contract / 10 Shares Month Strike Calls Puts Month Strike Calls Puts Become JAN 10 XYZAB XYZMB JAN 10 ZYXAB ZYXMB JAN 12 1/2 XYZAV XYZMV JAN 12 1/2 ZYXAV ZYXMV JAN 15 XYZAC XYZMC JAN 15 ZYXAC ZYXMC JAN 17 1/2 XYZAW XYZMW JAN 17 1/2 ZYXAW ZYXMW Observe above that the pre-split option symbol XYZ has been changed to ZYX on the split's ex-date. Strike price codes as well as expiration month codes remain the same - strike prices and expiration months are not adjusted because of a split. NOTE: The stock symbol for the new split stock may or may not remain XYZ after the split. This is determined by the primary exchanges on which the stock is traded. If, for example, you hold 5 XYZ JAN 10 calls before the split, or XYZAB contracts, you will then automatically hold 5 ZYX JAN 10 calls, or ZYXAB contracts, on the ex-date for the split and afterwards. Alternatively, if you had written, and were short 5 JAN 10 calls before the split, you will then automatically be short 5 JAN 10 calls on the ex-date for the split and afterwards. In either case, OCC (and your brokerage firm) will have made the adjustment to your option position for you. Generally 1 business day after the ex-date for the 1 for 10 split, the option exchanges on which the contracts are traded will generally list a new class of options reflecting the new price of the post-split stock. These "new" options will have standard strike prices, as well as standard strike price codes as possible. The option symbol for these new options will be determined by the option exchanges as well. NOTE: If you wish to close out some or all of your adjusted calls after the ex-date, it will be necessary to buy or sell adjusted JAN 10 calls, designated ZYXAB (previously designated XYZAB), not a new post-split Jan 10 call if one exists. Negligence in this matter could lead to your establishing new positions in an unadjusted (or "new") option series rather than closing out existing positions in adjusted series. The premiums you'll pay or receive for these adjusted contracts continue to be 100 times the price quoted in the marketplace. However, when one of these adjusted option contracts is exercised by its owner, 10 shares of the newly split stock will change hands at the strike price. In-the-money vs. Out-of-the-money When XYZ split 1 for 10, the contract deliverable for existing calls and puts was adjusted: 100 pre-split shares x 0.10 (1 ÷ 10) = 10 post-split shares. When determining whether an adjusted contract is in- or out-of-the-money, a current post-split stock price must be multiplied by the same 0.10 to adjust to a pre-split value. For instance, if XYZ is at a price of $115 after the split, a January 10 call, seemingly $105 in-the-money, would actually be exactly in-the-money by only $1.50. To see this more clearly, if XYZ is at $115, its adjusted, pre-split equivalent value would be calculated $115 x 0.10 = $11.50. Consider the Jan 10 call's aggregate exercise amount (or contract value): $10 strike x 100 multiplier = $1,000. Compare this to the current contract deliverable value of $115 per XYZ share x 10 shares = $1,150. In this scenario, to buy the call for its in-the-money amount you'd pay "$1.50," or $150 ($1.50 x 100 multiplier). To receive its in-the-money amount you'd sell the call for $1.50.