Chennai Petroleum had declared a dividend of Rs 18.5 and August 14th is the ex-date. How will this affect the F&O contracts?


#1

Chennai Petroleum had declared a dividend of Rs 18.5 and August 14th is the ex-date. How will this affect the F&O contracts? Can someone explain this?


#3

The F&O contracts will be adjusted for the dividend. SEBI guidelines state that

The adjustment in strike price shall be carried out in the following cases of declaration of dividends: Dividends declared at and above 5% of the market value of the underlying stock.

In this case, the dividend is over 5%.

Adjustments for Futures Contracts:
Base price of the Futures contracts on August 14, 2018 will be reference rate less aggregate amount
of dividend i.e. Rs. 18.50/-. The reference rate to be reckoned for this purpose shall be the daily
mark to market settlement price of the relevant futures contract.

Adjustments for Options Contracts:
The full value of dividend i.e. Rs. 18.50/- would be deducted from all the cum-dividend strike
prices on the ex-dividend date. The details of the old and corresponding new options contracts that
shall be available for trading from August 14, 2018 would be notified on August 13, 2018.

Check this circular for more NSE Circular.