What is the impact of TQQQ's first split and second split on options
Last month, TQQQ announced a new share split plan, one split and two split. As we can see from the following figure, TQQQ has carried out share split twice since 18 years, and now it is the third time. From the trend point of view, heavy warehouse TQQQ is simply the easiest strategy to lie down and win, but in fact, because of its triple attribute, it is a great test of human nature when faced with large market fluctuations, such as fusing the market during the epidemic in 2020,Share split used to be a very common operation in the stock market, but it only decreased after 2000. When the stock price of a company rises to a certain height, it will affect the trading volume of stocks and the purchasing desire of investors (especially retail investors), and the trading is light. At this time, the company will consider share split. In fact, the cases of share split are quite common. For example, the stock prices of large companies such as Apple and Google are usually more expensive, and share split is conducive to attracting more investors.
The change in share split is actuallyThe number of shares increases, the stock price decreases, and the market value remains unchanged.
What impact will share split have on options?
In the case of stock split, all potential derivatives will go through a process called "consolidation", which is carried out by the option clearing company. The guiding principle of the whole process is to ensure that the nominal value of each derivative contract is ultimately not affected by the stock split of the underlying stock. If you have one TQQQ call option, including 100 shares, with an exercise price of US $200, you will have two options after the split, and control the option to buy and sell 200 shares at an exercise price of US $100.
Summary: The value on the book of options remains unchanged, and the number of options has changed
After share split, the original options will be traded under a new code, and the liquidity will be less than before.$Tesla Motors(TSLA)$$ProShares UltraPro QQQ(TQQQ)$$NASDAQ-100 Index ETF(QQQ)$$NVIDIA Corp(NVDA)$$Apple(AAPL)$
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Disclaimer: The above content represents only the personal views of the poster and does not constitute investment advice on this platform.