Divident impact on Futures price

Hi Team,

Coal india has declared Rs.7.5 divident per share.

Exdate is 19.11.2020

I want to know how the price adjustment happens for future contract when divident is declared.

The closing price of Coal india future contract on 18.11.2020 is 128.25 and got opened on 19.11.2020 at 121.75. How the Future trader gets impact with corporate action? Please explain

Exchange has Adjustment Factor formula for corporate actions, the adjustment is carried out in such way that the value of the position of the market participants, on the cum and ex-dates for the corporate action, shall continue to remain the same as far as possible.

The adjustment can result in a change of base price, option strike values & the market lot depending on the adjustment factor. You can read more on this here.

You can also check out this post where effect of extraordinary dividend on F&O has been explained for REC: Adjustment of F&O contracts in REC Limited

Dividend being 5% or more than the closing price on the day of announcement is always subject to exact price adjustment both in Cash and F&0 and is called Extra Ordinary Dividend .

so adjustments are done in such way that there is no impact on value of positions held… can you give link to this formula??


You can check this article on the NSE website.

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