What is going to happen with EEM?

Question

http://finance.yahoo.com/q/op?s=EEM&m=2008-08

I saw the same thing on the thinkDesktop options chain, so those strike prices should be correct. The ETF had a 3 for 1 split on July 24 according to its yahoo chart. What is going to happen with the options chain? Aren't the options and strikes supposed to split along with the underlying? I'm confused.

Thanks for your help!

Answer 1

Options that were outstanding when the split was made were adjusted for the split. It this case the decision was made to simply modify the underlying to be 300 shares instead of 100 shares. I think that was probably done to prevent having odd strike prices. (For example, if they had split the options a $100 strike price option would have become at $33.33 strike price option.)

You can find a copy of the adjustment notice at

http://www.cboe.com/publish/TTStockSM/08...

When trading these options it will be important to remember that the EEMxx options each represent 100 shares while the adjusted EGHxx options each represt 300 shares.

In the future, if you want to look up other adjustment notices, you can use the search facility at

http://www.cboe.com/tradtool/contracts.a...