Option trading 5 Options on ABC Corp. have a strike of K=$300 per share. Nolan holds...
Option trading 5
Options on ABC Corp. have a strike of K=$300 per share. Nolan holds one contract. If the stock splits 2-for-1, then starting on the ex-date Nolan will have:
Please Choose One
- One contract for 200 shares with K=$150.
- One contract for 50 shares with K=$300.
- Two contracts for 100 shares each with K=$150.
- Two contracts for 100 shares each with K=$300.
Homework Answers
Please find below the solution... let me know if you need any clarification.
Correct answer is option : One contract for 200 shares with K=$150.
With the stock spplit option's lot size and strike price will be adjusted leaving no impact on other things. Therefore lot size will be doubled and strike price will reduce to half.
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