Stock Splits are used when the value of a company's stock is getting too high. The company will basically offer more stocks in the company but at a lower price.

Typical Example:

  • You hold 300 contracts in Y at a price of 1,607 per share
  • Company Y announce on X date, that it will be issuing a stock split of 5 for 1.
  • Hence for every 1 stock you hold you will be issued 5 stocks to replace each existing stock.
  • Now you will hold 1500 contracts at the reduced price of 321.4.
  • Note the overall contract value remains the same (300 contracts x 1,607 = 4,821, 1500 contracts x 321.4 = 4,821)
  • On your daily statement the stock split will appear under Ledger Activity as
  • Corp Action: Consolidation of ZZZ X for Y
  • (Where ZZZ is the company, X and Y are the terms of the stock split).