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Technology Stocks : 3Com Corporation (COMS)
COMS 0.001600.0%Nov 21 9:30 AM EST
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To: santhosh mohan who wrote (12956)1/6/1998 5:17:00 PM
From: Beachbumm  Read Replies (1) of 45548
 
Santhosh, I checked CBOE again and I'd say you are right. So I went back to the Characteristics & Risks of Standardized Options and found this wording on page 20 which is more clear:

"As a general rule, stock dividends, stock distributions and stock splits can result in an adjustment in the number of underlying shares or the exercise price, or both... However, when a stock distribution results in the issuance of one or more whole shares of stock for each outstanding share -- such as a 2 for 1 stock split -- as a general rule the number of underlying shares is not ajusted. Instead, the number of outstanding options is proportionately increased and the exercise price is proportionately decreased."

So, if you had a 3 for 2 split, the number of options you hold remains the same. But if you have a 2 for 1 split you will be holding twice as many options.

Beachbumm
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