Corporate Actions: Reverse Stock Splits
Managing a PositionA reverse stock split reduces the number of a company’s outstanding shares while increasing the share price proportionally—but what does this mean for option holders?
In this video, we break down reverse stock splits and how they can impact both the stock and associated equity options.
(0:17) Stock Splits Defined
(0:52) Forward Split Motivation
(1:22) Reverse Stock Split Motivation
(1:59) Example: 5 for 1 Forward Split
(2:27) Example: 1 for 10 Reverse Split
(3:39) Reverse Split Results
(4:41) Adjustments Made To/ Not Made to for Reverse Stock Splits
(5:06) Example: Reverse Stock Split
(6:45) Example: Reverse Stock Split Impact on Options
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