Corporate events & settlement
What are Adjusted Options contracts and how do they factor in special non-standard cash dividends?
By Easy Money Scanner · Educational reference · Not investment advice
The short answer
Adjusted options are contracts modified by OCC to account for special non-standard cash dividends exceeding a threshold, altering the strike price and/or deliverable to keep option holders economically neutral to the distribution.
How it works
OCC adjusts the contract's multiplier, strike price, or deliverable shares when a cash dividend is deemed 'special' per its bylaws, typically triggered by one-time distributions above ordinary quarterly amounts.
An example
If a company pays a $5 special dividend, OCC may reduce the strike price of outstanding options by $5 to offset the stock price drop on the ex-dividend date.
Risk & limitations
Adjusted contracts trade under modified symbols and deliverables can confuse traders comparing quoted premiums to standard unadjusted options chains.
Examples are hypothetical, not trade recommendations. US contract and regulatory references do not automatically apply in Canada. Rules, margin requirements and broker policies can change; confirm them with the relevant authority and your broker.