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1. Adjust the market price based on the split

   1. This keeps the security reference data intact, but requires manipulating the price

2. Create a new SMF with a revised price multiplier and transfer the existing position

   1. This allows the market prices to remain intact, but requires manipulating the security reference data and processing a corporate action

   2. Create a new SMF with the updated Option terms

      1. See Reuse Cross Reference Identifiers Processing Notes to reuse the same Primary Asset ID, or use a new one

      2. Adjust Price Multiplier (18) to the Reverse Split Ratio (25 instead of 1.00 for a “1-for-25” reverse stock split)

      3. Adjust Contract Size (19) based on the ratio

      4. Adjust Strike Price (67) based on the ratio

   3. Process Exchange Offer corporate action

      1. Create Exchange Offer corporate action announcement to exchange old SMF for new SMF at a ratio of 1:1

      2. Trigger corporate action using Exchange Offer global process

      3. Load future prices and trades to the new SMF

Example:

Spin-Off

Unless or until an Option is exercised, a spin-off for the underlying has no impact on the economic terms of the Option itself. It may affect the Option’s pricing in the market, but this does not require any changes in Eagle Accounting. You can optionally add the spin-off security as an additional underlying of the Option for reporting purposes.

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1. Exercise the Option as usual

   • This moves the Option’s full cost to a new position in the original equity underlying

2. Book free receive for spin-off security

   • Cost Type (24) = Trade "F"

   • Quantity/Current Face (40): calculate number of child security shares to be received as # of Option Contracts * Contract Size * Spin-Off Ratio

   • Price (45): calculate the unit cost for spin-off security including both the equity cost and portion of the option premium in accordance with settlement allocation terms

     • Price = ((Equity Cost + Option Premium Cost) * Settlement Allocation % for Spin-Off Security) / # of Spin-Off Security Deliverable shares

       • Equity Cost = # of Option Contracts * Contract Size * Strike Price * Price Multiplier

       • Option Premium Cost = # of Option contracts * Contract Size * Option Trade Price * Price Multiplier

3. Process cost adjustment on the new position in the original equity underlying equal to the cost used in Step 2. b. for the spin-off security

   • If you do not already have one set up, you will need to add a code value to the REC_DEL_ACCTS code category that offsets to the same memo account used by the free receive

     • The Long Description can be set to anything, but the Short Description must be 9333333334 (this is memo account TRANSFER OF ASSETS)

Example: