The Board of Directors of Life Insurance Corporation of India (LICI) announced the issue of bonus shares in the ratio of 1:1 (1 equity share for every 1 equity share held). The ex-date for this bonus issue is May 29, 2026.
As a result of LICI announcing the issue of bonus shares, the Futures and Options contracts in LICI will be adjusted according to the framework prescribed by SEBI. The adjustment will be both in Strike Price and Lot Size of Options and Price and Lot Size of the Futures contract. You can check the announcement from the exchange here.
SEBI has prescribed a framework for exchanges to adjust corporate actions in derivative contracts at the time of the corporate action. The exchange has published everything regarding the adjustments in the case of corporate actions here . The adjustments are carried out in such a way that the value of the position of the market participants, on the cum and ex-dates for the corporate action, continues to remain the same as far as possible.
Here’s how the adjustment works out:
Calculation of the adjustment factor:
The adjustment factor for a bonus issue of A:B is defined as (A+B)/B. For LICI, the adjustment factor is (1+1)/1 = 2 since the bonus issue ratio is 1:1.
Adjustment for Options Contracts:
Strike Price: The adjusted strike price is calculated by dividing the old strike price by the adjustment factor.
Lot Size: The adjusted lot size is arrived at by multiplying the old market lot by the adjustment factor. The revised lot size would be 1400.
Example:
Assume you hold a position in LICI JUN 820 CE. The current lot size is 700. On ex-date, the 820 CE will be adjusted to 410 (Strike Price 820 / Adjustment Factor 2), and the lot size will be adjusted to 1400 (Current Lot Size: 700 * Adjustment Factor 2).
If the option premium is ₹31 on pre-ex-date, the adjusted premium on ex-date would be ₹15.5 (Option Premium ₹31 / Adjustment Factor 2).
Adjustment for Futures Contracts:
Futures base price: The adjusted futures base price is arrived at by dividing the settlement price of the future one day before the ex-date by the adjustment factor.
Futures lot size: The adjusted market lot will be arrived at by multiplying the old market lot by the adjustment factor. The revised market lot would be 1400.
Example:
Assume you are holding a position in LICI JUN FUT and on pre-ex-date (May 28, 2026), futures close at 831, on ex-date, the price will be adjusted to 415.5 (Price on pre-ex-date: 831 / Adjustment Factor: 2)
While the lot size will be adjusted to 1400 (Current lot size: 700 * Adjustment Factor: 2).
Holders of F&O contracts are not eligible for corporate action benefits.
If you are holding equity shares of LICI on the ex-date (May 29, 2026), you will be eligible to receive the bonus shares. The shares will be credited to your account within 2 days from the record date (May 29, 2026).
You can learn more about this here