Replies to post #1559 on Direxion Daily Financial Bull 3X Shares (FAS)

[rocco2]

what are the details on the split?

[Porgie Tirebiter]

Whoa, thanks for the heads up!

http://www.direxionshares.com/pdfs/Reverse_Split_Q_A_101311.pdf

What will happen is that the options will also be reverse split to reflect the ratio.

As an example, if you are currently holding a put with a $10 strike, it will continue trading at close to the same price, and it will continue to show up as a DEC $10 strike. However, it will only represent a contract for 20 shares instead of 100.

So a post R/S $10 put will go into the money at share price of $50. A post R/S put of $15 will go into the money at share price of $75. So there will be no net change in value.

Although the values won't change, one thing to beware of is that Non-Standard options tend to be thinly traded and the bid-ask spread will tend to be much higher.