Wipro (₹577.85) has announced bonus with a ratio of 1:1. The face value per equity share is ₹2. The split will lead to necessary adjustments in the futures and options (F&O) contracts on this stock on the record date.

The company has decided December 3 as the record/effective date. On this day, the stock price and all derivatives contracts on Wipro will be adjusted appropriately.

With respect to adjustment in futures contracts, the reference rate of the relevant contract on December 2 will be considered. Reference rate will be the mark-to-market settlement price of the relevant futures contract. So, the open positions shall be carried forward to December 3 at the daily settlement price on December 2 divided by 2, the adjustment factor.

Suppose the nearest expiry futures (December contract) closes at ₹600 on December 2, it will be revised to ₹300 (₹600 divided by 2). Also, the lot size will go up 2 times from current 1,500 shares to 3,000 shares per contract. Hence, there won’t be any change in the contract value.

Likewise, in options, all the strike prices in the option chain of Wipro will be divided by 2 from December 3. For example, the strike price of 600 and 590 will be modified to 300 and 295 respectively.

That said, 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.

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