Reliance Industries (₹2,655.7), on October 18, announced bonus with a ratio of 1:1. The face value per equity share is ₹10. 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 October 28 as the record/effective date. On this day, the stock price and all derivatives contracts on Reliance Industries will be adjusted appropriately.

With respect to adjustment in futures contracts, the reference rate of the relevant contract on October 25 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 October 28 at the daily settlement price on October 25 divided by 2, the adjustment factor.

The nearest expiry futures (October contract) closed at ₹2,657.7 on October 25. It will be revised to ₹1,328.85 (₹2,657.7 divided by 2). Also, the lot size will go up 2 times from current 250 shares to 500 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 Reliance Industries will be divided by 2 from October 28. For example, the strike price of 2,740 and 2,760 will be modified to 1,370 and 1,380 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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