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Thursday, April 11, 2019 7:36:12 AM
"Being made whole" means the options contact is modified so that the holder is neither negatively nor positively affected by the corporate action. While a stock split adjusts the price of an option's underlying security, the contract is adjusted so that any changes in price due to the split do not affect the value of the option. If your option is purchased post-split (i.e. after the split is announced), it will not be adjusted because it already reflects the post-split price of the underlying security. The Options Clearing Corporation will automatically make these adjustments, for the sake of orderly and smoothly functioning markets.
The "being made whole" calculation is relatively straightforward. Each option contract typically controls 100 shares of an underlying security at a predetermined strike price. The new share ownership is generated by taking the split ratio and multiplying by 100. while the new strike price is generated by taking the old strike price and dividing by the split ratio."
link: https://www.investopedia.com/ask/answers/what-happens-to-options-when-stock-splits/
I'm wondering what happens to Options in a RS?
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