InvestorQ : How will the F&O positions of Bajaj Finserv be adjusted post the split and bonus?
Chandralekha Desai made post

How will the F&O positions of Bajaj Finserv be adjusted post the split and bonus?

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NISHA Nayak answered.
4 weeks ago
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Bajaj Finserv announced 1:1 bonus plus a stock split where the face value of Bajaj Finserv will be split from Rs5 per share to Rs1 per share with ex-date of 13th September. How will the split and bonus impact holdings? If an investor holds 100 shares of Bajaj Finserv, the 1:1 bonus via capitalization of reserves, will double holding from 100 shares to 200 shares. The stock is split at 5 for 1, will convert 200 shares of face value Rs5 into 1,000 shares of face value 1. So, 100 shares of Bajaj Finserv become 1,000 shares post bonus and split.

Let us look at how this adjustment will be done for futures positions. Adjusted positions will be arrived at by multiplying number of pre-adjusted contracts by adjustment factor of 10. Thus 1 lot would become 10 lots. Now, the adjusted price will be arrived at by dividing the pre-adjustment price by the factor of 10. If you are long on 1 lot of Bajaj Finserv Futures (50 shares) at a price of Rs17,200 as on 12th September, then post the adjustment on 13th of September, you will be long on 10 lots of Bajaj Finserv (500 shares) at price of Rs1,720.

Let us now turn to the options adjustment. Firstly, the strike price (exercise price) will be adjusted by dividing the old strike price by the adjustment factor of 10. Then, the adjusted positions in options will be arrived at by multiplying old number of contracts by the factor of 10. So, 1 lot of Bajaj Finserv call option of 17,250 strike will become 10 lots at a revised strike price of Rs1,725.

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