Mahindra & Mahindra Financial Services (M&MFin) (₹298.2) announced an interim dividend of ₹6.30 per equity share of face value ₹2 for the financial year 2023-24. This will also lead to necessary adjustments in the futures and options (F&O) contracts on this stock on the record date.
The company has decided July 16, as the record/effective date. On this day, the stock price and all derivatives contracts on M&MFin will be adjusted appropriately.
With respect to adjustment in futures contracts, the reference rate of the relevant contract on July 15 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 at the daily settlement price on July 15 less the dividend amount of ₹6.30.
For example, if the nearest expiry futures close at ₹300 on July 15, it will be revised to ₹293.70 (₹300 minus ₹6.30). Accordingly, the contract value will come down from ₹6,00,000 to ₹5,87,400 (derivatives lot size is 2,000 shares).
Likewise, in options, all the strike prices in the option chain of M&MFin will be subtracted by 6.30 from July 16. For example, the strike price of 297.50 and 300 will be modified to 291.2 and 293.7 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.