Adjusted options

Adjusted option contracts occur when an underlying stock undergoes a major change to one or more elements of its original capital structure, affecting the value of individual shares. To account for these changes, the stock’s options must be adjusted. These modifications can occur at any time and, unfortunately, you have no control over when or how they change.

Causes of adjusted options

Changes that can cause adjusted option contracts include:

  • Abnormal cash dividends (not paid on regular basis)
  • Stock dividends
  • Symbol or company name change
  • Stock splits (and reverse stock splits)
  • Mergers and acquisitions

Identifying adjusted options

There are several indicators that can help you identify an adjusted option. When an option contract is adjusted, one or more of the following characteristics will change:

  • Strike price
  • Expiry date
  • Contract size/multiplier (normally the value is 100 for standard contracts and 10 for mini options)
  • Cash in lieu (a cash payment for fractional shares)
An adjusted option will be grouped the same way as regular options, but it can be distinguished by a number in parenthesis and/or an  icon next to the expiry date—depending on the platform area.

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