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10 Feb 2025, 03:44 PM
Adjustment of F&O contracts of HEROMOTOCO due to dividend
As per NSE circular effective February 12, 2025, the strikes of HEROMOTOCO 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 HEROMOTOCO will be marked-to-market on the last cum-dividend date, i.e. February 11, 2025, 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. 100 (dividend amount) for the respective futures contract.
From February 11, 2025, (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 (150 quantities) of HEROMOTOCO futures on February 11th, 2025, at Rs. 4200, and the daily settlement price at the market close is Rs. 4250, you would have made a mark-to-market profit of Rs. 50 per share.
On February 12, 2025, the previous day’s position will be carried forward at Rs. 4150 (i.e. 4250 –100). If the closing price on February 12th, 2025, is Rs. 4220, you’ll make a mark-to-market profit of Rs. 70 per share.
Adjustment for option contracts:
The full value of the dividend i.e. Rs. 100 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. 4200 Call Option will be reduced to Rs. 4100 on February 12th, 2025, and the positions in Rs. 4200 Call Option will continue to exist in Rs. 4100 Call Option.
The lot size of the F&O contracts will not change.
Also, if you hold equity shares of HEROMOTOCO in your Demat account as of February 12th, 2025 (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.