Option and stock split question

G

GaSouthernTrader

Hi, I just started trading options after learning about it in my MBA class and I have a question about stock splits that was never covered.

AAPL has a 7-1 stock split next week and I was wondering how does that effect option prices and call/put amounts during/after the split?
 
In theory and IIRC, isn't this determined by the OCC on a case-by-case basis? If you go to their website, you will find notices that they issue when these splits happen.

Still there's a most common outcome, which is what the previous poster suggested. Specifically, in a N for 1 split, for every strike X option contract, you will get N contracts at strike X/N.
 
Ok I have another question. I have mainly been day trading cheap weekly option contracts with Facebook with profitable results. When AAPL stock splits on the 6th, I'm guessing I will have to own the contract by the 2nd in order to receive the split just like a normal stock owner would. Then, according to AAPL's website, stock holders can trade on a split adjusted basis on June 9th.

So my question is does that mean I will not be able to sell the additional contracts until the 9th? I'm trying to decide if I want to buy some contracts and if so the best date.

Thanks in advance.
 
GaSouthernTrader said:
So my question is does that mean I will not be able to sell the additional contracts until the 9th? I'm trying to decide if I want to buy some contracts and if so the best date.
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The options will trade normally throughout the week, just be aware of the new strikes if you hold through the split.

I wonder how the brokers will handle the commissions. Will they charge for 7 contracts or 1 contract on positions that were opened before the split? I assume they will charge for 7 contracts.

:)
 
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