Which Corporate Actions affect F&O contracts?

Which Corporate Actions affect F&O contracts?

The following corporate actions typically lead to adjustments in derivatives contracts:
• Stock splits
• Bonus issues
• Extraordinary (special) dividends
• Rights issues
• Mergers and demergers
• Capital reduction
Regular cash dividends generally do not result in adjustments unless classified as extraordinary.

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      A) Dividends Dividends are payments made by a company to its shareholders. • If the dividend is less than 2% of the stock price → No adjustment • If the dividend is 2% or more (extraordinary dividend) → Strike price and futures base price may be ...

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      No. Adjustments are designed to neutralize the financial impact of corporate actions. While contract specifications may change, the net economic exposure and P&L remain unchanged.

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      The different types of corporate actions announced by a company are: Rights issue Dividend Stock Split Conversion of debentures into shares Amalgamation Merger Demerger Capital reduction / Consolidation of shares Buy Back Bonus Open Offer