I'm going to use Amazon as an example here since it'll be splitting at the end of May. (20:1 split)
Say I buy a call option tomorrow with $4000 strike that ends in July. The split will have happened and I know the Options Clearing House will come in and readjust my strike price based on the new numbers. So my $4000 strike price would become $200 post split.
My big question is would I get more contracts to make up for the difference as well since it's 20:1 split? My 100 potential shares for that option contract would then become 2000 potential shares during the split so for it to be adjusted correctly, they would have to adjust the amount of contracts as well, right?
Or would it still be 1:1 and I would just eat a healthy premium?
Options are complex sometimes.. any help would be greatly appreciated for my understanding.
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