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How a Split Or Reverse Split Affects Options

Options Flow

What happens to my options after a split or reverse split?

 

You're likely already familiar with stock splits and reverse stock splits. Quick refresher:

 

Imaginary stock $ABC, trading at $100, will undergo a 10:1 split.  

 

The owner of ONE share at $100 (total value $100) will own TEN shares worth $10 each post split (total value of $100 remains unchanged).  

 

Imaginary stock $DEF, trading at $10, will undergo a 1:10 reverse split.

 

The owner of TEN shares at $10 (total value $100) will own ONE share worth $100 post reverse split (total value of $100 remains unchanged).

 

** The key takeaway is that there is no change in your stock equity after a split or reverse split. The same applies to your options positions after a split. **

 

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Now let's take a look at how options for $ABC and $DEF will be affected:

 

Regular split:  

 

Imaginary stock $ABC, trading at $100, will undergo a 10:1 split.  

 

As previously mentioned the owner of ONE share at $100 (total value $100) will own TEN shares worth $10 each post split (total value of $100 remains unchanged).  

 

The owner of ONE $ABC $100 strike call (imaginary premium of 1.00) will own TEN $10 strike calls (each valued at .10).  

 

If you recall back in November of 2023 Pelosi purchased 50 $NVDA 120c 12/20. $NVDA has undergone a 10:1 split. Her new position is 500 $NVDA 12c 12/20.

 

 

Reverse split:  

 

Imaginary stock $DEF, trading at $10, will undergo a 1:10 reverse split.

 

As previously mentioned the owner of TEN shares at $10 (total value $100) will own ONE share worth $100 post reverse split (total value of $100 remains unchanged).

 

The owner of ONE $DEF $10 strike call (imaginary premium of .10) will own ONE $DEF $100 strike call. Unlike other options which control 100 shares this new option only controls 10 shares. This type of option is known as a non-standard option. Non-standard options will carry a '1' after the underlying symbol (example BAC1). Non-standard options cannot be opened; brokerages will only accept closing orders. Non-standard options can also carry a cash component as well.

 

 

[Unusual Whales Split Feed](https://unusualwhales.com/stock-splits)

 

[Unusual Whales Non-Standard Options Feed](https://unusualwhales.com/non-standard-options)