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china life insurance lfc

china life insurance lfc

What happens to the option of a share after the stock split?

I bought the call option a stock of China Life Insurance (LFC). The stock had a split, but the option still has an appeal based on its previous price. And the symbol of the call changed to LFC TRL. Whats Going On?

If the stock is valued at A $ 100 today and you have 10 shares, you have $ 1,000 worth of shares in A. If tomorrow there is a stock split of 2:1, then tomorrow, you have 20 shares worth $ 50 $ Each, you still have a value of $ 1,000 sotck A. If you had an option with an exercise price of $ 100 yesterday and sold for say $ 220 by contract. Tomorrow, after the split, you have two call contracts with a strike price of $ 50, but the price can vary by contract where the value of yesterday is not the same tomorrow (sometimes arbitrage situations come here, and sometimes it's just the normal change things like implied volatility, premium time, etc.) There are situations where it can be really retarded and confusing for the retail investor. For example, 3:02 divides may modify the contract before call to be 150 shares as opposed to the 100 standard. I have seen some situations where this arbitration happens.