As per SEBI guidelines for adjustments to F&O contracts in case of announcement of corporate actions (Methodology explained here on NSE website) :
Infosys Limited has considered and approved Bonus at the ratio of 1:1 i.e 1 bonus share issued at Rs.0 for every share held.
The Company has fixed the Record Date as September 05, 2018 for the purpose of Bonus issue.
Symbol - INFY
Bonus Issue Ratio - 1:1
Ex Date - September 04, 2018
Effect on Holdings -
When a bonus is issued, the share price drops, in this case by a factor of 2 (Adjustment factor for Bonus issue of A:B is defined as (A+B)/B. In case of INFY, the adjustment factor will be (1+1)/1 = 2, since the bonus issue ratio is 1:1). So, if you held INFY at an average price of 1400, the price of each share after bonus adjustment will be 700.
You’ll be given 1 share at Rs.0 for every share held at Rs 1400, thereby maintaining your overall investment value.
Please note that a bonus issue only increases liquidity and not your investment value.
Adjustments for Option Contracts -
- Strike Price -The adjusted strike price will be arrived at by dividing the old strike price by the adjustment factor
- Market Lot - The adjusted market lot will be arrived at by multiplying the old market lot by the adjustment factor. The revised market lot will be 1200.
Ex: INFY 27-SEP-2018 1420 CE lot size 600 - after adjustment will be INFY 27-SEP-2018 710 CE lot size 1200
Adjustments for Future contracts -
- Futures Base price - The adjusted futures base price shall be arrived at by dividing the old futures price by the adjustment factor.
- Market Lot - The adjusted market lot will be arrived at by multiplying the old market lot by the adjustment factor. The revised market lot will be 1200.
Ex: INFY SEP FUT at 1388.95 will be INFY SEP FUT 694.50
Note - The above changes are effective from September 04, 2018. Refer the circular from NSE regarding this for more information. To know more about the impact of corporate actions on stock prices, check this chapter on Varsity.
