Adjustment of Corporate Actions for Stock Option

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..... cts, has recommended the risk containment measure for Exchange Traded Stock Option Contracts. The Technical Group had set up a sub-group comprising officials of BSE NSE to determine a common methodology for adjusting corporate actions on Stock Options. Based on the recommendation of the sub-group, the Technical Group decided that since options on common stock would be trading on both NSE BSE the corporate adjustment for the Option on the same underlying should be uniform across markets. While a uniform adjustment methodology could be adopted for certain corporate action, it would be difficult to specify any uniform policy for all corporate actions at this stage. For this purpose, it has been decided to constitute a group comprising NSE, .....

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..... may be broadly classified under stock benefits and cash benefits. The various stock benefits declared by the issuer of capital are : Bonus Rights Merger/De-merger Amalgamation Splits Consolidations Hive-off Warrants, and Secured Premium Notes (SPNs) among others. Extraordinary dividends 1. The methodology proposed to be followed for adjustment of various corporate actions to be carried out are as follows: Bonus, Stock Splits and Consolidations Strike Price - The new strike price shall be arrived at by dividing the old strike price by the adjustment factor as und .....

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..... roup by adjusting Strike Price or Market Lot, so that no forced closure of open position is mandated. 1. Dividends which are below 10% of the market value of the underlying stock, would be deemed to be ordinary dividends and no adjustment in the Strike Price would be made for ordinary dividends. For extraordinary dividends, above 10% of the market value of the underlying stock; the Strike Price would be adjusted. 2. The Exchange may on a case to case basis carry out adjustments for other corporate actions as decided by the group in conformity with the above guidelines. Yours sincerely, (N.PARAKH) CHIEF GENERAL MANAGER DERIVATIVE CELL - Ci .....

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