Shares Per Contract

Discussion in 'Options' started by ess1096, Sep 28, 2006.

  1. ess1096

    ess1096

    Just wondering why some contracts choose to be non-conformists and instead of 100 shares per contract they offer 150? Any ideas?
     
  2. Pabst

    Pabst

    There's something bizarre about the strike prices as well. Who ever heard of an option with a $46.63 strike?

    What's the stock?
     
  3. ess1096

    ess1096

    The stock is MDR, McDermott International.
    But I have seen this in other option chains as well.
     
  4. These are generally caused by a split or other one-time share adjustment.

    They get weirder--some options exercise into a long and a short of two different equities (happened this year to me with a call), or a long and cash.

    Be careful, you'll sometimes see options that are "too good to be true", often they include delivery of another company's shares as well.
     
  5. With whole stock splits (2:1, 3:1, etc), the number of contracts is increased and the strike price is reduced. Therefore, a 2:1 split on a $30 stock results in 2 contracts having a $15 strike (100x1x30 = 100x2x15).

    With fractional stock splits (3:2, 5:2, etc), the number of shares covered per contract increases and the strike price is reduced. Therefore, a 3:2 split on a $30 stock results in 1 contract with a $20 strike, covering 150 shares (100x30 = 150x20)