effect of stock split,dividends & bonus issue on value of futures and options?

Question

if the answer is in indian context it will be better to understand.other examples will also do.by options i mean both call and put options.

Answer 1

When a stock splits (two for one), the number of options double and the strike price is cut in half. There is no change in the total value of the options.

When a dividend is paid, the asset price drops. This causes a fall in the value of call options and an increase in the value of put options. There are rare occasions where it is preferable to call American call options before the ex-dividend date.

I have no idea what you mean by "bonus issues" -- so can't comment on that.

Answer 2

Splits will lower the price of the stock. So it is benificial for those who sell call and buy puts and not benificial to those who buy calls and sell puts.
Dividends will lower price by that amount theoretically for a short period. So the result is same as above.
For Bonus shares then number of shares outstanding increases which can bring down the price and the result is same as above.
The result happens during the announcement time.

Answer 3

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