Been trading options for a while but never dealt with a stock split before.
I have some positions open and one of the stocks just announced a 2-for-1 split. Not sure what this means for my trades.
Does the strike price change? What about the contract size? I really don’t want to mess this up.
After a 2-for-1 split, your strike price halves and you get double the contracts.
Stock splits change your strike price and contract size.
I had Tesla calls at $500 strike before the 5-for-1 split. After the split, my strike became $100 and I controlled 500 shares instead of 100.
It all balances out - your broker handles this automatically.
Your position value stays the same - everything just gets adjusted proportionally. In a 2-for-1 split, your strike price gets cut in half and your contract multiplier doubles. So a $100 strike call becomes a $50 strike controlling 200 shares instead of 100.
The math works out exactly the same. Your broker handles all the adjustments automatically overnight, so you’ll wake up to new numbers. Don’t freak out when you see different strikes - that’s just the adjustment doing its thing.
OCC handles contract adjustments automatically. With a 2-for-1 split:
• Strike gets cut in half
• You get double the contracts
• Premium adjusts to match
Your position value stays the same.
Stock splits adjust everything proportionally - your position value stays the same. Strike price gets divided by the split ratio, shares per contract get multiplied.
Most brokers handle this automatically, but check with them about timing. Trading might pause for a day or two on the adjusted contracts.
Just keep an eye on your positions after the split to make sure everything looks right.