Adjustment of Futures & Options Contracts Due to Rights Issue: Grasim Industries Ltd

A rights issue is a corporate action that offers existing shareholders an opportunity to buy additional shares from the company at a discounted price. After the rights issue is announced, the strike price and the market lot will also be revised.

As per a recent circular, Grasim Industries Ltd has announced a rights issue. The key details for the adjustment of futures & options contracts are as follows:

Company NameSymbolRights Issue RatioEx-date/Effective DateOld Market LotRevised Market
Grasim Industries LtdGRASIM06:179 (6 equity shares for every 179 shares held)10-Jan-24475477

Let’s understand this with an example.

ParticularsAdjustment for Options ContractsAdjustment for Futures Contracts
Adjusted Strike/Futures PriceOld Strike Price*Adjustment FactorOld Futures Base Price*Adjustment Factor
Adjusted Market LotOld Market Lot/Adjustment FactorOld Market Lot/Adjustment Factor
Adjustment ExamplePosition - GRASIM 2000 CE; Current Market Lot - 475
On Ex-date - 2000 CE will be adjusted toStrike Price: 1992 CE (2000*0.995989)Revised Market Lot: 477 (475*0.995989)
Position - GRASIM Futures; Current Market Lot - 475; Future Price Pre-Ex-Date - 2000
On Ex-date - 2000 will be adjusted toStrike Price: 1992 CE (2000*0.995989)Revised Market Lot: 477 (475*0.995989)

1. The above changes shall be effective from the ex-date/effective date 

2. The revised options strike/futures base prices and the lot size on account of adjustment would appear in decimal places and shall be rounded off to the nearest tick size, and the lot size shall be rounded off to the nearest integer.

3. Members will be informed separately of the details of the revised option strike prices, futures prices, lot size, and quantity freeze limit, wherever applicable. 

Refer: NSE Circular 

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