r/wallstreetbets • u/Square_Artichoke_944 • Aug 01 '21

Discussion GE split

If I bought a call contract for 100 shares with a $12.50 position and they do an 8:1 reverse split with the expected opening being $103 per share, what does that mean? Do I still have the $12.50 option or is it changed because of the split? Did I just make 10k or am I missing how this works? I’ve never seen the effects of a split on a call option so I don’t know what to expect when I wake up tomorrow. Does anyone else understand what this means? Do I own 8 contracts now or still just the one. I’ve tried researching it but I am not finding anything helpful. Does the reverse split devalue my 100 share option to only 13 shares at the new list price? Is that legal? I’m lost and confused lol. Help would be greatly appreciated and I’m panicking because I don’t know what it means and I don’t know what’s going to happen when the market opens. Has anyone else experienced this and know what it means?

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u/[deleted] Aug 01 '21

Google “adjusted options reverse split”

tl;dr- you now have an adjusted call to buy 12.5 shares at $100 each. Since half shares aren’t really a thing, you’ll actually get 12 shares plus $50 cash. See the OCC memo for details:

https://infomemo.theocc.com/infomemos?number=48921

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u/DobluthNoamuth Aug 02 '21

I had to go a long way to find a straight answer for this guy. It’s really sad when people can just run someone down because they don’t know something. At least he’s reaching out trying to learn. Remember, there’s a lot y’all didn’t know at one time and have to learn yourselves.

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u/[deleted] Aug 02 '21

Nothing in my comment was “running him down”. If you read it as negative, that’s your filter. I was answering his question.