Chapter 31: The Impact of Stock Splits, Dividends, and Rights Issues on Option Contracts

In this section

• Adjustments for Stock Splits
  Explore how corporate actions like stock splits affect options contracts, focusing on key adjustments to contract size, strike price, and notional value for traders and investors in Canadian markets.
• Adjustments for Stock Dividends
  Learn how stock dividends affect option contracts, focusing on the mechanisms, timing, and the principle of economic equivalence. Explore real-life examples and best practices for investors in Canadian markets.
• Cash Dividends in Options Trading
  Explore how routine and special cash dividends affect equity option contracts, their pricing, and early exercise decisions under Canadian regulations.
• Impact of Dividends on Option Premiums
  Explore how dividends influence the pricing of calls and puts, early exercise considerations, and practical strategies in the Canadian marketplace.
• Rights Issues in Option Contracts: Understanding Stock Dilution, Adjustments, and Implications
  Explore how rights issues affect outstanding shares, option contracts, and corporate capital structure, equipping investors with practical knowledge on the mechanics of these corporate actions in derivative markets.
• Handling Spin-Offs & Special Dividends
  Explore how spin-offs and special dividends impact option contracts, including adjustment mechanics, market implications, and regulatory guidance.
• Bourse de Montréal Adjustment Procedures
  Explore how the Bourse de Montréal coordinates with the Canadian Derivatives Clearing Corporation (CDCC) to adjust listed options in response to corporate actions, ensuring fair treatment for all participants.