As of yesterday, Vedanta was trading at around ₹460, and since today is its ex-dividend day, the stock price was reduced by ₹20.
Here is my observation, yesterday VEDL Sept 460 PE was trading at around ₹10, and today the same option VEDL sept 460 PE is trading at around ₹21, so anyone who had bought the option yesterday for ₹10, without any analysis would have sold it today at ₹21 ?
Is this kind of some loophole or am I missing something?
The full value of the dividend, i.e., Rs. 20, 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. 500 Call Option will be reduced to Rs. 480 on September 10, 2024, and the positions in Rs. 500 Call Option will continue to exist in Rs. 480 Call Option.
The lot size of the F&O contracts will not change.
Also, if you hold equity shares of VEDL in your Demat account as of September 10, 2024(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.
Oh okay!!! Got the at…
But this is because of the circular of NSE stating that VEDL if giving extraordinary dividends. But what happens to the scenario wherein stock underlying gives normal dividends ? Will there be adjustments still? Or what is the criteria? In simple terms, What I meant is, what would have been the scenario if NSE wouldn’t have released that circular? @Meher_Smaran
