The Board of Directors of Wipro Limited (WIPRO) declared a dividend of Rs. 6/- per share, the ex-dividend date being January 28, 2025.
SEBI has prescribed a framework for the exchanges to adjust corporate actions in derivative contracts at the time of the corporate action. The exchange has published everything regarding the adjustments in case of corporate actions here. Accordingly, if a company declares a dividend at and above 2% of the market value of the underlying security, it is considered an extra-ordinary dividend and the exchange will take action in the adjustment of the futures and options contracts in the underlying security.
Since the dividend declared by WIPRO is above 2% of the market value of the security, the exchange has published this circular on the adjustment of F&O contracts in WIPRO on the ex-date: January 28, 2025.
Adjustment for future contracts:
All positions in futures contracts of WIPRO will be marked-to-market on the last cum-dividend date, i.e. January 27, 2025, based on the daily settlement price of the respective futures contract. Subsequently, open positions will be carried forward at the daily settlement price less Rs. 6 (dividend amount) for the respective futures contract.
From January 28, 2025, (ex-dividend date), daily mark-to-market settlement of the futures contracts will continue as per normal procedures.
For example:
Assume you bought 1 lot (3000 quantities) of WIPRO futures on January 27th, 2025, at Rs. 320, and the daily settlement price at the market close is Rs. 330, you would have made a mark-to-market profit of Rs. 10 per share.
On January 28, 2025, the previous day’s position will be carried forward at Rs. 324 (i.e. 330 –6). If the closing price on January 28th, 2025, is Rs. 328, you’ll make a mark-to-market profit of Rs. 4 per share.
Adjustment for options contracts:
The full value of the dividend i.e. Rs. 6 will be deducted from all the cum-dividend strike prices on the ex-dividend date. All positions in existing strike prices will continue to exist in the corresponding new adjusted strike prices.
For example:
The strike price of Rs. 330 Call Option will be reduced to Rs. 324 on January 28th, 2025, and the positions in Rs. 330 Call Option will continue to exist in Rs. 324 Call Option.
The lot size of the F&O contracts will not change.
Also, if you hold equity shares of WIPRO in your Demat account as of January 28th, 2025 (ex-date) you will be entitled to receive the dividend which will be credited directly to your primary bank account within 30 to 45 days from the record date.