What will happen to my options when Motorola splits in 2 on Jan 4th..

beachforlife's picture
Rank: Chimp | 2

I figure all you trading pros can shed some light on this..

Do you get the benefits of a stock dividend when you only own a call option for x number of shares? Do you then control x+ dividend number of shares upon maturity of the option?


Motorola will split into 2 companies on January 4th and I'm considering buying some call options maturing after the split.

So the transaction will go down like this: prior to January 4th current stockholders will receive a stock dividend of Motorola Mobility shares (that the company splitting off) and then the old company will do a reverse stock split.

The question is once my options mature will that include control over Motorola Mobility shares that were distributed through a stock dividend?

Part 2: What happens to your options if there is a reverse stock split? Since fewer shares are outstanding does that mean you still have a contract to be able to purchase the original amount?

Comments (1)

Dec 13, 2010

"Salesmen and traders are wild, cunning, aboriginal creatures who advise money managers about deceiving their bosses and finding new strip bars; their favourite phrase is, "Fuck you." IBankers eat fruit. Salesmen and traders eat meat, preferably fried."