Evaluate Trade Adjustments
Series 7 · Flashcards · Application
SERIES 7 · FLASHCARDS
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QUESTION
In a
3
3
3
-for-
2
2
2
stock split, what is the new contract deliverable for a standard
100
100
100
-share option?
QUESTION
A customer buys
200
200
200
shares at
30
30
30
, then a
2
2
2
-for-
1
1
1
split occurs. What are the new shares and price?
QUESTION
After a
2
2
2
-for-
1
1
1
stock split, what is the new strike for a call with a
50
50
50
strike?
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ANSWER
New strike is
50
÷
2
=
25
50 \div 2 = 25
50
÷
2
=
25
. In a 2-for-1 split, the strike halves to match the reduced per-share price post-split.
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