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Strategies & Market Trends : How To Write Covered Calls - An Ongoing Real Case Study! -- Ignore unavailable to you. Want to Upgrade?

To: Senator949 who wrote (7778)	6/26/1998 5:42:00 PM
From: Douglas Webb	Respond to of 14162

Could you tell me what happens to options in the case where a stock splits? For example a Stock is currently trading at $92 and you purchase 1 Jan 100 Call contract for 12 1/4. Sometime before Jan the stock splits 3 for 1. You would end up owning 3 Jan 33.33 call contracts. I'm not sure what happens to the round-off error in a 3-1 split like this.... Doug.

To: Senator949 who wrote (7778)	6/27/1998 12:18:00 PM
From: Herm	Read Replies (1) \| Respond to of 14162

Welcome Robin, Thanks for your question. Doug already gave you the answer. You would get what ever the split is (3-1, 2-1, etc.) for your calls. In essence, the total dollar value remains the same but the number of calls you have increases. It is really neat to see the leverage in call options when there is a rapid capital appreciation after the split occurs. Here are some links for stock split information. WHAT HAPPENS IN STOCK SPLITS?: e-analytics.com UPCOMING STOCK SPLIT DATES: e-analytics.com SI - STOCK SPLIT STRATEGIES: Subject 15600