IMPLICATIONS OF BONUS ISSUE IN BSE LIMITED

 

 

BSE Limited has announced issue of bonus share in the ratio 2:1 i.e. 2 (Two) new fully paid-up Equity Shares of ₹ 2/- each for every 1 (One) existing fully paid-up Equity Share of the Company. The Company has fixed Friday, May 23, 2025 as the Record Date.

 

Adjustment factor for Bonus share of A: B is defined as (A+B)/B.

In the case of BSE LIMITED, the adjustment factor is (2+1)/1 = 3

Impact on your existing Futures and Options position:

IN FUTURES

Positions before adjustment:

Client	Instrument	Security Symbol	Expiry date	Long position	Short Position
A	FUTSTK	BSE	29-May-25	125	0
B	FUTSTK	BSE	26-Jun-25	0	125
C	FUTSTK	BSE	31-Jul-25	0	125

 

Positions after adjustment:

Client	Instrument	Security Symbol	Expiry date	Long position	Short Position
A	FUTSTK	BSE	29-May-25	375	0
B	FUTSTK	BSE	26-Jun-25	0	375
C	FUTSTK	BSE	31-Jul-25	0	375

 

You can calculate the new future price as follow:

= (Closing price / Adjustment factor) *New lot size 

= (Closing price / 3) * 375

 

Key consideration – There will be no change in your overall exposure or margin requirement. The price decreases and the lot size increase, keeping the contract value constant.

 

IN OPTIONS

Positions before adjustment:

Client	Instrument	Security Symbol	Expiry date	Strike Price	Option Type	Long Position	Short Position
A	OPTSTK	BSE	29-May-25	7000	CE	125	0
B	OPTSTK	BSE	29-May-25	7000	PE	0	125
C	OPTSTK	BSE	26-Jun-25	7250	CE	125	0
D	OPTSTK	BSE	26-Jun-25	7250	PE	0	125

 

 

Positions after adjustment:

Client	Instrument	Security Symbol	Expiry date	Strike Price	Option Type	Long Position	Short Position
A	OPTSTK	BSE	29-May-25	2333.35	CE	375	0
B	OPTSTK	BSE	29-May-25	2333.35	PE	0	375
C	OPTSTK	BSE	26-Jun-25	2416.65	CE	375	0
D	OPTSTK	BSE	26-Jun-25	2416.65	PE	0	375

Strike Price: The adjusted strike price will be arrived at by dividing the old strike price by the adjustment factor i.e., 3.

Lot Size: The adjusted lot size will be arrived at by multiplying the old market lot by the adjustment factor.

Old lot size=125

Adjustment factor = 3

New lot size = 125*3= 375

Let’s walk through an example to demonstrate the impact of the 2:1 bonus share issue on both Futures and Options positions in BSE Limited and see how price is calculated?

Scenario: Pre-bonus

BSE Limited Stock price: ₹7260

Lot Size for Futures & Options: 125 shares per lot

Option Strike Price (Call Option): 7500

Option Premium: ₹150 per share

Position:

1 lot of BSE Futures (Long) at ₹7800

1 lot of BSE Call Option (Long) with 7500 strike price and premium of ₹150

 

Post-bonus: Impact on Position

1. Impact on Futures Position: 

Price Adjustment: Post the 2:1 bonus issue, the price of the futures contract will be adjusted downward. If the pre-bonus price was ₹7800, the post-bonus price will be approximately 3 times lower to ₹2600 (subject to market behaviour).

Lot Size Adjustment: The lot size will double from 125 shares to 375 shares.

Value of Position:

Pre-bonus Value of Futures: ₹7800 × 125 = ₹9,75,000

Post-bonus Value of Futures: ₹2600 × 375 = ₹9,75,000

The notional value of the futures contract remains the same at ₹9,75,000, so the value of your position is not affected in terms of total worth.

 

2. Impact on Options Position:

Adjustments	Formula	Example
Strike Price	New Strike Price = Old Strike Price/ 3	Old strike price = 7500 New strike price = 2500
Lot Size	New lot size = Old lot size * 3	Old lot size = 125 New lot size = 375
Option Premium	New premium= Old premium/3	Old premium = 150 New premium = 50

 

Value of Position:

Pre-bonus Value of Options: ₹150 (premium) × 125 (shares) = ₹18,750

Post-bonus Value of Options: ₹50 (premium) × 375 (shares) = ₹18,750

Like the futures, the notional value of your options position remains the same at ₹18,750.

 

Summary of Impact:

1. Futures:

The price will be half (from ₹390 to ₹195), but the lot size will double (from 125 to 375).

The overall value of your futures position remains the same.

2. Options:

The strike price and premium will be changed (strike price from ₹7500 to ₹2500, premium

from ₹150 to ₹50), and the lot size will double (from 125 to 375).

The total value of your options position also remains unchanged.

 

Frequently Asked Questions:

 

a) What will happen to F&O open positions in BSE Limited?

For clients holding F&O contracts expiring on 29^th May, 2025, 26^th June, 2025, 31^st July, 2025: These contracts shall expire on respective expiries & will be adjusted according to the framework prescribed by SEBI. The adjustment for Futures will be Price and Lot Size & for Options will be Strike Price and Lot Size and option premium.

 

b) What is the impact on my mark to market settlement?

Since the futures price will be adjusted, clients' MTM values will also reflect this change. However, the overall position in value terms should remain neutral because both the price and the lot size change in proportion.

 

c) Will the open interest change after the bonus share, and how is it adjusted?

The open interest in terms of the number of contracts or lots held remains the same, but the actual number of shares in each contract changes. So, while the contract count doesn't change, the shares per contract do, ensuring the overall position value is unaffected.

 

d)    Is there any change in margin requirements due to the bonus share?

Typically, the margin requirements are adjusted to reflect the new lot size and contract price. Since the value of the position remains the same, there is no significant change in the total margin required.

 

e) What is the margin required for revised BSE LIMITED contracts?

Margin will be as per the exchange rule of SPAN + ELM

 

f) How my physical settlement works under bonus share?

If one has gone long in stock option and as on effective date i.e., 23th May, 2025, the customer’s needs to bring 10% of Var + ELM as per the rules, the margin requirement will be as per the contract value that is unchanged.

 

g) Can I carry over my existing F&O positions after bonus shares, or do I need to take any action?

Yes, you can carry over your existing F&O positions after bonus shares. The exchange automatically adjusts the strike price, lot size, and contract terms, so you don’t need to take any specific action.

 

h) When will the adjustment be reflected?

The adjustments in F&O positions will be made by the exchange at the time of the ex-bonus date.

 

i) What happens if I exit my position before the ex-bonus date?

If you exit F&O position before the ex-bonus date, they will not be affected by the bonus adjustment. The exit will occur at the market prices prior to the adjustment.

 

j) How one can check corporate action while having an open position?

It is shown in order book in offline mode. The changes will reflect before the execution date, on your F&O open position as shown in example below:

 

 

  

k) Will it impact my profit / losses?

No, it does not affect your profit and losses as the contract value remains unchanged. Only strike prices, lot size and premium will be adjusted accordingly.

 

l) What will be the impact on portfolio?

The portfolio will show the following transactions. Adjustments in portfolio are shown in the example below:

 

 

For Example - 550-PE, 540-PE, 520-PE strikes is valued at 110-PE, 108-PE, 104-PE respectively    as shown above in portfolio details.

Transactions will show the price adjustment at ₹0.05 with adjusted strike price with adjusted lot size as shown below:

 

 Overall Trading impact on 23 May ,2025

Adjustments	Formula	Example
Strike Price	New Strike Price = Old Strike Price/ 3	Old strike price = 7500 New strike price = 2500
Lot Size	New lot size = Old lot size * 3	Old lot size = 125 New lot size = 375
Option Premium	New premium= Old premium/ 3	Old premium = 150 New premium = 50

 

Your total position value is unaffected by the bonus; it's just the numerical parameters (strike price, lot size, and premium) that are adjusted accordingly. One can exit its position partially as the number of lot size is increased.

In summary, the bonus shares only adjust the numerical values of strike prices, lot sizes, and premiums while keeping the overall value of F&O positions unchanged.

 

Points to Remember:

-Review Portfolio: Clients are advised to review their portfolio post-adjustment to ensure everything is in order.

-Monitor Volatility: Bonus issues may lead to some short-term volatility in stock prices, which can affect options premiums and futures prices.

-The bonus issue is a neutral event in terms of your position value.

-Take actions accordingly if you want to modify or exit your position or you can partially square off too.

 

It is advised to monitor F&O positions in BSE LIMITED and take timely action. 

 

NSE circular: Circular