Stock split

• Stock grouping
• Stock split
• Capital increase paid - free
• Merger
• Demerger
• Conversion of shares
• Extraordinary dividend
• Delisting of contracts

  
  

  The stock split is the opposite of a stock grouping. It involves an increase in the number of shares in circulation, which are replaced by new shares according to a set ratio. At the same time, the price must decrease in an inversely proportional way to the increase in the number of shares.

  With a 3 for 1 stock split, each shareholder is assigned 3 "new" shares for each "old" one handed back.

  Borsa Italiana calculates the adjustment coefficient according to formula 2. This value, always with 6 decimal digits, is multiplied by the strike prices (daily closing prices) and divided by the lot.

  Consequently, stock option contracts (stock future) subject to a stock split will see a change in their strike prices (daily closing prices) and lot size.

  Formula 2.

       V
  K = --------
       N

  where:

  • V = number of old shares
  • N = number of new shares

  Impact on derivatives contracts

  Adjustment of the strike price (daily closing price):

  E_ex = E_cum x K

  where:

  • E_cum = strike price (daily closing price) before the adjustment
  • E_ex = strike price (daily closing price) after the adjustment

  Adjustment of the number of underlying shares (lot):

                      1   
  A_ex = lot x -----
                       K   

  where:

  • A_ex = number of underlying shares (lot) after the adjustment

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