11 Jul 2024, 12:24 AM

Adjustment of F&O contracts of IOC due to dividend

As per NSE circular effective July 12, 2024, the strikes of IOC 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 IOC will be marked-to-market on the last cum-dividend date, i.e., July 11, 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. 7 (dividend amount) for the respective futures contract.

From July 12, 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 (4875 quantities) of IOC futures on July 11, 2024, 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 July 12, 2024, the previous day’s position will be carried forward at Rs. 203 (i.e., 210 – 7). If the closing price on July 12, 2024, is Rs. 205, you’ll make a mark-to-market profit of Rs. 2 per share.

Adjustment for option contracts:

The full value of the dividend, i.e., Rs. 7, 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. 193 on July 12, 2024, and the positions in Rs. 200 Call Option will continue to exist in Rs. 193 Call Option.

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

Also, if you hold equity shares of IOC in your Demat account as of July 12, 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.