Pursuant to the announcement of dividend by NMDC Ltd, the futures and options (F&O) contracts will be adjusted accordingly. The dividend amount is ₹2.85 and the effective date for this is August 31.
Like in every other adjustment, the futures price will be reduced by the dividend amount. For this, since the effective date is August 31, the settlement price on August 30 will be considered. All the open positions will be deducted by the dividend amount ₹2.85 and will be carried over to August 31.
For instance, if the settlement price of NMDC futures on August 30 is ₹120, the positions that traders hold will be deduced by ₹2.85 and thus, the price of the futures will be adjusted to ₹117.15 (₹120-2.85). As this can lead to a drop in contract value, the margin can be lower. From August 31, the daily mark-to-market settlement of futures contract would continue as per normal procedure.
Similarly, the strike price of the option contracts on NMDC will also be modified. The value of the dividend will be deducted from all the strike prices on August 30. Thus, from August 31, all the strikes in option chain will be ex-dividend. For example, the strike price of 129, 130 and 131 will be revised to 126.15, 127.15 and 128.15 respectively.
Broadly, all futures contract and the strike price of options contract will see a deduction of ₹2.85 from August 31.