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What Does Apple's Stock Split Mean for Investors? (Including Options Traders)

Wednesday, August 05, 2020 09:34 AM | Bobby Raines

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What Does Apple's Stock Split Mean for Investors? (Including Options Traders)

Apple (AAPL) announced a four-for-one stock split as part of it's quarterly report on July 30.

The split will be effective on Aug. 31 for holders of record as of Aug. 24. This means that anyone owning the stock as of the close on Aug. 24 will see their shares split on Aug. 31. The result of the split will be that each share owned prior to the split will become four shares before the open on Aug. 31. The price of these shares will be 25% of the closing price on the previous trading day, which is Aug. 28.

What does this mean for options traders?

If your options are set to expire before Aug. 31, it doesn't mean anything. Your options will be gone by the time the split happens.

If your options expire after Aug. 31, you will see some changes. According to the information meme posted by the OCC (PDF), each contract will be divided into four new contracts, with the strike prices reduced to 25% of the original strike price. Each new contract will still cover 100 shares.

So for example, if you currently have one contract with a strike price of 400, after the split, you will have four contracts with a strike price of 100.

The split itself will not have any effect on whether or not your options are in the money or out of the money.

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