NMDC (₹238.30) had announced a dividend of ₹5.75 for FY24. Accordingly, there will be adjustment in the stock price and the futures and options (F&O) contracts on this stock on the record date.
The company has decided February 27 as the record/ex-dividend date. On this day, the stock price and all derivatives contracts on NMDC will be adjusted for the dividend amount.
With respect to adjustment in futures contracts, the reference rate of the relevant contract on February 26 will be considered. The reference rate will be the mark-to-market settlement price of the relevant futures contract. So, the open positions shall be carried forward at the daily settlement price on February 26 minus the dividend, which is ₹5.75.
For example, if the nearest expiry futures close at ₹240 on February 26, it will be revised to ₹234.25 (₹240 less ₹5.75). Consequently, the contract value will drop to ₹10,54,125 from ₹10,80,000, post the adjustment.
In options, all the strike prices in the option chain of NMDC will be deducted by ₹5.75 on February 27. For example, the strike price of 237.50, 240 and 242.50 will be altered to 231.75, 234.25 and 236.75 respectively.
The above measures are not likely to impact the overall trend of this stock. So, traders can stick to their views and are only required to note the changes in the contracts that they hold.