Adjustment of Futures and Options contracts in the security HAVELLS

Posted on by Subhendu Sarkar

In pursuance of NSE Circular Ref. No. 056/2014 and Download Ref. No. NSE/FAOP/27345 dated August 13, 2014 and SEBI guidelines for adjustments to futures and options contracts on announcement of corporate action, the members are informed of the following:

 

Havells India Limited has informed to National Stock Exchange that it has fixed August 27, 2014 as the Record Date for the sub-division of the nominal face value of the equity shares of the company from Rs.5 to Rs.1 per equity share. Hence each shareholder would be entitled to receive 5 Equity Shares of Rs.1 each for every 1 Equity Share of Rs.5 each of the Company.

 

Symbol                        : HAVELLS

Stock split ratio           : 5:1

Ex-date                       : August 26, 2014

 

Adjustment factor:

 

Adjustment factor for Stock split of A: B is defined as (A/B). In the case of HAVELLS, the adjustment factor is (5/1) = 5, since the split ratio is 5:1.

 

Adjustments for Options Contracts:

 

  1. Strike Price: The adjusted strike price shall be arrived at by dividing the old strike price by the adjustment factor.

 

  1. Market Lot: The adjusted market lot shall be arrived at by multiplying the old market lot by the adjustment factor. The revised market lot would be 1250

 

Adjustments for Futures Contracts:

 

  1. Futures price: The adjusted futures price shall be arrived at by dividing the old futures price by the adjustment factor.

 

  1. Market Lot: The adjusted market lot shall be arrived at by multiplying the old market lot by the adjustment factor. The revised market lot would be 1250.

 

An example for deriving the adjustment factor, revised strike /futures base price and lot size is given in Annexure-1

The above changes shall be effective from August 26, 2014.

The details of the revised option strike prices, futures prices and quantity freeze limit will be informed to you all separately on August 25, 2014.

 

Annexure-1

 

Option contracts before adjustment:

 

Instrument Symbol Expiry date Strike Type Market Lot
           
OPTSTK HAVELLS 28-AUG-2014 1200 CE 250
           
OPTSTK HAVELLS 28-AUG-2014 1200 PE 250
           
OPTSTK HAVELLS 28-AUG-2014 1220 CE 250
           
OPTSTK HAVELLS 28-AUG-2014 1220 PE 250
           
Options contracts after adjustment:      

 

Instrument Symbol Expiry date Strike Type Market Lot
           
OPTSTK HAVELLS 28-AUG-2014 240 CE 1250
           
OPTSTK HAVELLS 28-AUG-2014 240 PE 1250
           
OPTSTK HAVELLS 28-AUG-2014 244 CE 1250
           
OPTSTK HAVELLS 28-AUG-2014 244 PE 1250
           

 

 

 

Futures contract before adjustment:

 

Instrument Symbol Expiry date Future Base price** Market Lot
         
FUTSTK HAVELLS 28-AUG-2014 1174.90 250
         
Futures contract after adjustment:    
         
Instrument Symbol Expiry date Future Base price# Market Lot
         
FUTSTK HAVELLS 28-AUG-2014 235.00 1250
         

 

The revised strike/futures prices and the lot size on account of adjustment would appear in decimal places. The strike/futures prices shall be rounded off to the nearest tick size and the lot size shall be rounded off to the nearest integer.

 

# The figure is only an indicative value for the purpose of example.