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18 May 2024, 09:29 AM
Adjustment of F&O contracts of VEDL due to dividend
As per NSE circular (web), effective May 24, 2024, the strikes of VEDL 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 VEDL will be marked-to-market on the last cum-dividend date i.e. May 23, 2024, 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. 11 (dividend amount) for the respective futures contract.
From May 24, 2024 (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 (2300 quantities) of VEDL futures on May 23rd, 2024, at Rs. 440, and the daily settlement price at the market close is Rs. 445, you would have made a mark-to-market profit of Rs. 5 per share.
On May 24, 2024, the previous day’s position will be carried forward at Rs. 434 (i.e. 445 – 11). If the closing price on May 24th, 2024, is Rs. 440, you’ll make a mark-to-market profit of Rs. 6 per share.
Adjustment for options contracts:
The full value of the dividend, i.e. Rs. 11 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. 450 Call Option will be reduced to Rs. 439 on May 24th, 2024, and the positions in Rs. 450 Call Option will continue to exist in Rs. 439 Call Option.
The lot size of the F&O contracts will not change.
Also, if you hold equity shares of VEDL in your Demat account as of May 24th, 2024 (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.