Monday, July 25, 2022 6:45 pm
AU Small Finance Bank (AUBANK) conducted a meeting with its Board of Directors on 26th April 2022. As per this meeting, it has declared, to the Exchange, an issue of Bonus Shares in the ratio of 1:1. The record date for the issue of Bonus Shares is 10th June 2022.
What are Bonus Shares? These are additional shares given by a company to existing shareholders for free as an alternative to distributing dividends.
How does this corporate action impact Futures & Options Contracts?Impact on Futures Contract:
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The adjusted base price shall be arrived at by dividing the old futures price by the adjustment factor.
- The adjusted market lot shall be arrived at by multiplying the old market lot by the adjustment factor. The revised market lot would be 1000
Impact on Options Contract:
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The adjusted strike price shall be arrived at by dividing the old strike price by the adjustment factor.
- The adjusted market lot shall be arrived at by multiplying the old market lot by the adjustment factor. The revised market lot would be 1000.
*Adjustment factor for the bonus issue of A: B is defined as (A+B)/B. In the case of *AUBANK the adjustment factor is (1+1)/1 = 2 since the bonus issue ratio is 1:1.
For all positions taken before 9th June 2022, you may see a slight deviation in the carried forward (c/f) average price of AUBANK due to the corporate action mentioned above.
To know more, read the circular here.
