It's very curious to me how and why different companies decide whether this is important or not.
For example I'd like to sell some covered calls for my AMZN as a hedge against a correction later, but since I don't own $300k+ of AMZN share, I literally cannot sell a single call contract.
I'm not saying it would be a great idea or anything, just that it's going to happen eventually and being first will probably garner a fair amount of business and attention (both positive and negative).
As an example, I’m currently holding contracts I purchased in March on SPXL and the daily volume is less than 5. With such low volume, the practicality of fractional ownership is not there.
[1] https://www.cnbc.com/2017/08/01/snapchat-excluded-from-sp-50...
It turns out that there are indeed share classes of these companies with no voting rights (GOOG, class C) but I haven't found an example of a company that doesn't have some voting shares in non-insider hands.
It's still shitty that the S&P indices barred SNAP while turning a blind eye to the existing inequities. I'm perfectly okay with them barring new split share listings but at least begin to apply it to others that benefit from the lack of corporate governance.
[1] https://berkshirehathaway.com/compab.pdf#:~:text=Berkshire%2....
I mean I would assume they do, but just wonder if there are ever any severe "gotchas" with a stock split with certain existing buy/sell arrangements, or derivatives etc.
There's a million tiny details like this that can cause consequences that are both different from what a customer intended and what our terms with said customer states, so making sure it's all handled in a safe way is just part of daily business.
Options are also split to take the stock split into account.
Trading platforms shouldn't have to do anything unless they are faking GTC orders by resending them out each day as Day orders.
But if your vendor is doing that then, get a new vendor as that's completely bush league.
Exchanges do not receive or handle GTC or GTD orders, see for example the NYSE pillar spec.[1]
Broker-dealers handle stock splits and the behavior varies according to your broker. Some brokers will request the broker-dealer cancel all orders back, but most brokers allow limit prices to be adjusted for orders "below the market" (buy limit orders and sell stop orders). The Fidelity FAQ is an illustrative one.[2]
I'm not sure what a "vendor" is here, but brokers send GTC orders to broker-dealers, who forward them to the exchange every day as a day order. This behavior is industry standard and certainly not bush league.
[1] https://www.nyse.com/publicdocs/NYSE_Pillar_Gateway_FIX_Prot...
https://www.nasdaqtrader.com/content/ProductsServices/Tradin...
it is true the the NYSE eliminated GTC orders. That just means you can't use them on NYSE, which doesn't affect my point:)
You'll have to flesh out your point more if you still feel like you have one:)
Given that I've written more than one trading systems for a living, I'm going to take my 20 years of experience over a random internet troll.
Here is the specific rule relating to adjusting the price of open orders: https://www.finra.org/rules-guidance/rulebooks/finra-rules/5...
For example 1 option contract for Amazon (over $3k share price) can easily be $4,000. In comparison, you can buy 1 option for Apple ($400) contract for $200. After the stock split, option contracts will be 1/4 the current price.
Lower stock prices make the options market much more accessible to people investing less money (for better or worse).
Some of them sold much more volatility, via variance swaps, with quite disastrous results.
https://www.institutionalinvestor.com/article/b1lffwvwdh7xtq...
Selling puts, though, is a fools game unless the market has already really tanked. Black Scholes isn't perfect, yadda, yadda.
I guess one issue with this approach is that it somewhat assumes a period of low-inflation between now and option expiry (unless you're factoring that into the 15% expected return).
Buy at $400 (price at time of writing) sell an option at $460 for January which comes with a $42 premium[0] at time of writing, so if the stock goes up 15% over the six month period the total return is $102 per share, or about 25% return. If inflation is, say, 4% per annum due to Covid pushing it a bit higher than normal, then the total return is ~23% vs what would have been ~13% for doing the same play without selling the option, so the real return is around 75% higher than the alternative where the option was not sold.
Usually it's around 30% more, so right now is an especially good time for this play if you think that Apple will at least hold its value.
[0] https://finance.yahoo.com/quote/AAPL220121C00460000?p=AAPL22...
For example, if the theory goes that more people will want to buy apple now that the price is a "steal" (people think it's harder to 2x a big number than a small number) then it could go above that on open.
I prefer to believe that stocks are not in a bubble of such epic proportions that a stupid split can be an "event".
That is the split of Google A and C some years back, where Google added a new class of shares with different voting power.
In the Apple split each share after the split will be worth 1/4th, have 1/4th voting power, will receive 1/4th of dividend, etc. just reading happens in smaller fractions.