How Does a Stock Split Affect the Terms of a Physically Settled Option Contract?
A stock split requires an adjustment to the option contract terms to ensure the option holder is not disadvantaged. For a 2-for-1 split, the number of contracts held remains the same, but the strike price is halved, and the contract size (number of shares per contract) is doubled.
Glossar
Non-Negotiable Contract Terms
Clause ⎊ Non-negotiable contract terms are the fixed, standardized clauses within an exchange-traded derivative agreement that cannot be altered by the individual buyer or seller.
Stock Option Vesting
Acquisition ⎊ Stock Option Vesting is the process by which an employee or contributor earns the right to exercise their granted stock options or token rights over a specified period of service.
Key Options Contract Terms
Contract ⎊ Options contracts, within the cryptocurrency derivatives space, represent agreements to buy or sell an underlying digital asset at a predetermined price on a specified future date.
Volatility Impact on Crypto
Exposure ⎊ Volatility impact on crypto assets fundamentally alters risk assessment, demanding a shift from traditional methods to those incorporating stochastic volatility models and jump diffusion processes.
Stock Option Repricing
Adjustment ⎊ Stock option repricing is a corporate action where the exercise price of previously granted employee stock options is lowered to match a significantly reduced current market price of the underlying stock.
Sixty Forty Capital Gains Split
Source ⎊ This favorable tax treatment is a direct consequence of an instrument qualifying as a Section 1256 contract under relevant tax code provisions.
Token Split Mechanism
Mechanism ⎊ The token split mechanism is the technical procedure, often executed via a smart contract upgrade or migration, that increases the number of tokens held by each user by a predetermined ratio.
Stock Split
Action ⎊ A stock split is a corporate action where a company increases the number of its outstanding shares by dividing each existing share into multiple new shares, proportionally decreasing the price per share.
Futures Contract Delivery Terms
Delivery ⎊ These stipulations define the precise mechanism by which the underlying asset or cash equivalent is exchanged upon contract maturity for futures.
Chain Split Impact
Consequence ⎊ Chain Split Impact refers to the complex technical and economic ramifications that follow a hard fork, where a single blockchain diverges into two distinct, incompatible ledgers.