Hi, I just started trading options after learning about it in my MBA class and I have a question about stock splits that was never covered. AAPL has a 7-1 stock split next week and I was wondering how does that effect option prices and call/put amounts during/after the split?
In theory and IIRC, isn't this determined by the OCC on a case-by-case basis? If you go to their website, you will find notices that they issue when these splits happen. Still there's a most common outcome, which is what the previous poster suggested. Specifically, in a N for 1 split, for every strike X option contract, you will get N contracts at strike X/N.
Ok I have another question. I have mainly been day trading cheap weekly option contracts with Facebook with profitable results. When AAPL stock splits on the 6th, I'm guessing I will have to own the contract by the 2nd in order to receive the split just like a normal stock owner would. Then, according to AAPL's website, stock holders can trade on a split adjusted basis on June 9th. So my question is does that mean I will not be able to sell the additional contracts until the 9th? I'm trying to decide if I want to buy some contracts and if so the best date. Thanks in advance.
The options will trade normally throughout the week, just be aware of the new strikes if you hold through the split. I wonder how the brokers will handle the commissions. Will they charge for 7 contracts or 1 contract on positions that were opened before the split? I assume they will charge for 7 contracts.