15 Sep 2023, 06:30 PM

Adjustment of F&O contracts of GNFC Limited due to dividend

As per NSE circular (WEB), effective September 18th, 2023, the strikes of GNFC options and the base price of the futures contracts will be revised due to extraordinary dividends.

Adjustment for future contracts:

All positions in futures contracts of GNFC will be marked-to-market on the last cum-dividend date i.e. September 15th, 2023, based on the daily settlement price of the respective futures contract. Subsequently, open positions will be carried forward at the daily settlement price less Rs. 30 (dividend amount) for the respective futures contract.

From September 18th, 2023 (ex-dividend date), daily mark-to-market settlement of the futures contracts would continue as per normal procedures.

For example:
Assume you bought 1 lot (1300 quantity) of GNFC futures on September 15th, 2023, at Rs. 700, and the daily settlement price at the market close is Rs. 740, you would have made a mark-to-market profit of Rs. 40 per share.

On September 18th, 2023, the previous day’s position will be carried forward at Rs. 710  (i.e. 740 – 30). If the closing price on September 18th, 2023, is Rs. 720, you’ll make a mark-to-market profit of Rs. 10 per share.

Adjustment for options contracts:

The full value of the dividend i.e. Rs. 30 will be deducted from all the cum-dividend strike prices on the ex-dividend date. All positions in existing strike prices will continue to exist in the corresponding new adjusted strike prices.

For example:

The strike price of Rs. 800 Call Option will be reduced to Rs. 770 on September 18th, 2023, and the positions in Rs. 800 Call Option will continue to exist in Rs. 770 Call Option.

The lot size of the F&O contracts will not change.

Also, if you hold equity shares of GNFC in your demat account as of September 18th, 2023 (ex-date) you will be entitled to receive the dividend which will be credited directly to your primary bank account within 30 to 45 days from the record date.