Lets say hypothetically I have a call option expiring in 6 months on a stock. And the stock just announced a stock dividend that will take place in 2 weeks. What would happen to my option. Generally for a stock split the option would just be tied up with the split ratio x 100 amount of shares with a strike price at old strike price / split ratio. But what about a stock dividend? Would the option value just decrease immensely and go heavily out of money? Or would the same mechanic take place once the stock dividend happens, ie the option is allocated more shares at a lower strike price.
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