16 Nov 2023, 06:00 PM
Adjustment of F&O contracts of ONGC due to dividend
As per NSE circular (WEB), effective November 21st, 2023, the strikes of COALINDIA 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 ONGC will be marked-to-market on the last cum-dividend date i.e. November 20th, 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. 5.75 (dividend amount) for the respective futures contract.
From November 21st, 2023 (ex-dividend date), daily mark-to-market settlement of the futures contracts will continue as per normal procedures.
For example:
Assume you bought 1 lot (3850 quantities) of ONGC futures on November 20th, 2023, at Rs. 200, and the daily settlement price at the market close is Rs. 210, you would have made a mark-to-market profit of Rs. 10 per share.
On November 21st, 2023, the previous day’s position will be carried forward at Rs. 204.25 (i.e. 210 – 5.75). If the closing price on November 21st, 2023, is Rs. 207, you’ll make a mark-to-market profit of Rs. 2.75 per share.
Adjustment for options contracts:
The full value of the dividend i.e. Rs. 5.75 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. 200 Call Option will be reduced to Rs. 194.25 on November 21st, 2023, and the positions in Rs. 200 Call Option will continue to exist in Rs. 194.25 Call Option.
The lot size of the F&O contracts will not change.
Also, if you hold equity shares of ONGC in your demat account as of November 21st, 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.