Stock split

The stock split is the opposite of a stock grouping. It involves an increase in the number of shares in circulation, which are replaced by new shares according to a set ratio. At the same time, the price must decrease in an inversely proportional way to the increase in the number of shares.

With a 3 for 1 stock split, each shareholder is assigned 3 "new" shares for each "old" one handed back.

Borsa Italiana calculates the adjustment coefficient according to formula 2. This value, always with 6 decimal digits, is multiplied by the strike prices (daily closing prices) and divided by the lot.

Consequently, stock option contracts (stock future) subject to a stock split will see a change in their strike prices (daily closing prices) and lot size.

Formula 2.

     V
K = --------
     N

where:

• V = number of old shares
• N = number of new shares

Adjustment of the strike price (daily closing price):

E_ex = E_cum x K

where:

• E_cum = strike price (daily closing price) before the adjustment
• E_ex = strike price (daily closing price) after the adjustment

Adjustment of the number of underlying shares (lot):

                    1   
A_ex = lot x -----
                     K   

where:

• A_ex = number of underlying shares (lot) after the adjustment

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