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January 10, 2024
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 Name | Symbol | Rights Issue Ratio | Ex-date/Effective Date | Old Market Lot | Revised Market |
| Grasim Industries Ltd | GRASIM | 06:179 (6 equity shares for every 179 shares held) | 10-Jan-24 | 475 | 477 |
Let’s understand this with an example.
| Particulars | Adjustment for Options Contracts | Adjustment for Futures Contracts |
| Adjusted Strike/Futures Price | Old Strike Price*Adjustment Factor | Old Futures Base Price*Adjustment Factor |
| Adjusted Market Lot | Old Market Lot/Adjustment Factor | Old Market Lot/Adjustment Factor |
| Adjustment Example | Position - 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
